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JUST A HANDFUL of weeks ago, I posted about achieving a $1 million net worth. Now my status as a millionaire is already in jeopardy. While the value of some of my financial assets have held steady—and some have seen gains—the portion of my retirement account invested in the stock market has suffered significant losses.
My retirement account balance peaked on Jan. 4 at $478,000. Today, it hovers around $430,000. Since I retired in late May, I’m no longer adding money to the account. Without those regular contributions, I know it could take months—and perhaps years—for the balance to rebound.
Am I worried? Not yet.
For now, I feel financially secure. I pay off my credit card in full every month. I haven’t had to dip into my emergency savings. Between my husband’s retirement income and the money we made from the sale of our Portland home, we can easily cover all our bills.
My hope: It’ll be at least a decade before I need to begin taking withdrawals from my retirement accounts. In seven years, at age 62, I’ll likely start drawing Social Security. That income, combined with my husband’s, should provide us with enough money to cover all our expenses.
In the meantime, the portion of my retirement savings that’s invested in a guaranteed return fund will continue to grow. I’m earning close to 5% on that money. My state pension fund also continues to grow at a rate of 7.5% a year. I plan on leaving that money in place until I turn 72. At that point, I’ll be required to take withdrawals.
It feels good to know I have other options besides tapping my retirement accounts. I’m confident I could land a part-time job if the need arose. I’m also in the early stages of starting my own dog training business. I don’t know how successful the business will or won’t be. Since the overhead costs are low, the financial risk is minimal.
For now, my status as a millionaire depends on the whims of the stock market. But by having a substantial portion of my retirement portfolio invested in guaranteed return accounts, I know I can afford to ride out the current market volatility.
As Fred Schwed put it long ago, “Like all of life’s rich emotional experiences, the full flavor of losing important money cannot be conveyed by literature,” (Where Are The Customers’ Yachts?). I do sympathize. Glad you are secure.
Is the fixation on a $1 million net worth for your family based on some analysis of your needs because you believe that a $1 million net worth is needed to support your family over 30 plus year period of time or is it because $1 million is some magic number that boomers should aspire to? The only logical way to determine how much of a net worth is needed is based on the fixed and variable expenses that need to be covered over time. A huge net worth is not needed if things like SS, pensions, annuities cover, at a minimum, the fixed costs and much more that you will incur over time on a yearly basis. Ideally, if your SS, pensions annuities etc cover the preponderance of your expenses then a very high net worth is not necessary. Millions of Americans have very limited retirement assets and are often mostly “house wealthy” if they own a home. These people have fixed costs like mortgage, if any, utilities, telephony, property taxes, car and car repairs, as well as car, health and LTC insurance(which is not appropriate with low total assets). People with low net worth get by using tools like reverse mortgages to provide additional funds for emergency use purposes. It is possible to come up with very detailed projections for the future using an Excel spreadsheet.
Yep. My 401K has crossed the threshold 20 times… 10 complete round trips above and then back below. It’s simply a result of fixating on certain numbers and the current market fluctuations, but it does get my attention.
Congratulations on your retirement. Best of luck with your dog training business. I enjoy reading your posts and am interested in hearing other strategies. Please keep writing and sharing your financial journey.