What? What "it" are you referring to? I just agreed with the article that net worth alone doesn't give a full financial picture. It's just one piece. As I mentioned above, I don't include my future pension and Social Security in my net worth. However, I do include it in my assessment of financial readiness to retire.
I agree with the article that just considering present net worth (assets - liabilities) gives an incomplete financial picture. My approach in assessing my retirement readiness is to not ignore those future assets, but to include them as off-sets to needed withdrawals from my portfolio. For example, if my expenses are $60,000/year, a rough estimate using the 4% rule-of-thumb, says I need a portfolio of $1.5 million. But if I have social security and a pension coming that reduces how much I need to have saved. So it might look more like this: Total Annual Expenses: $60,000
Pension: $16,000
Social Security: $24,000 I subtract the $40,000 I can expect from the pension and social security and that leaves $20,000 that needs to be covered by my portfolio. Which puts the needed portfolio amount at $500,000. If I didn't include those future sources of income, I'd have a much different picture! I think both methods get you to roughly the same place, I just find looking at it in the way I've outlined more intuitive. I haven't used Boldin's planner, but I've heard good things about it. My favorite online planners are:
Congratulations! Thank you for sharing your wonderful news. How fantastic that after a couple of years of looking for ways to share your passion you found a venue in your community. Wishing you a fall filled with fun, community, and better-trained dog owners!
I would be happy if the price of gas reflected its true cost, including externalities - pollution, effects on health, climate change and related mitigation efforts. A number of studies put that cost at ~$15/gallon.
Well said. I appreciate your putting "successful" in quotes - while those individuals may have an obscene amount of money, that is only one measure of success. And, in my view, not an important or meaningful one. I also appreciate your proposed solution. Not participating in "a system that feeds their avarice" is better for one's pocketbook, and is certainly better for the planet. Thanks for posting this comment - it's an important reminder that there are ways to channel our frustration/outrage/anger (insert your feeling here!) into actions that are productive and individually meaningful.
There was a recent discussion on Bogleheads you might find informative. I also put the term 'liability matching portfolio' in the search box and a number of discussions with valuable information came up.
I don't think you're too conservative at all; as they say, personal finance is personal. And I agree that the $60,000 in guaranteed income would be nice! My thinking is that 4% isn't an aggressive amount to be drawing down. If one follows the 4% +inflation guidance from the Trinity study, the purchasing power of the income (SS + investments) stays the same. I'd be worried that a pension with no COLA would result in a decrease in real income. I think either approach has associated risks and both have pros and cons. At the end of the day, Bill and Joe are both well set-up for a wonderful retirement - however it looks to them! :)
I can only speak for myself, but the fact that Joe's pension has no COLA, and Bill has $1.5 million more in assets makes the choice easy. The OP asked us which scenario we'd prefer, not what we think of pensions!
I would much rather be Bill. I'd invest the $2,250,000 in a 70/30 portfolio of index funds (e.g., VTSAX and VTBLX) and use either the Variable Percentage Withdrawal (VPW) or Total Portfolio Allocation and Withdrawal (TPAW) to determine how much to draw down.
I just got back from a trip to Ireland, and also noticed, and was disappointed in, the format change to the Lonely Planet guidebook I bought. Such a bummer...
Comments
What? What "it" are you referring to? I just agreed with the article that net worth alone doesn't give a full financial picture. It's just one piece. As I mentioned above, I don't include my future pension and Social Security in my net worth. However, I do include it in my assessment of financial readiness to retire.
Post: Let’s Stir Up the Bee’s Nest Again- Another Way of Calculating Net Worth
Link to comment from June 14, 2025
I agree with the article that just considering present net worth (assets - liabilities) gives an incomplete financial picture. My approach in assessing my retirement readiness is to not ignore those future assets, but to include them as off-sets to needed withdrawals from my portfolio. For example, if my expenses are $60,000/year, a rough estimate using the 4% rule-of-thumb, says I need a portfolio of $1.5 million. But if I have social security and a pension coming that reduces how much I need to have saved. So it might look more like this: Total Annual Expenses: $60,000 Pension: $16,000 Social Security: $24,000 I subtract the $40,000 I can expect from the pension and social security and that leaves $20,000 that needs to be covered by my portfolio. Which puts the needed portfolio amount at $500,000. If I didn't include those future sources of income, I'd have a much different picture! I think both methods get you to roughly the same place, I just find looking at it in the way I've outlined more intuitive. I haven't used Boldin's planner, but I've heard good things about it. My favorite online planners are:
- Firecalc
- Rich, Broke, or Dead
- cFIREsim
They each allow the user to input future income (e.g., SS, pension) as well as future expenses (e.g., LTC).Post: Let’s Stir Up the Bee’s Nest Again- Another Way of Calculating Net Worth
Link to comment from June 14, 2025
Congratulations! Thank you for sharing your wonderful news. How fantastic that after a couple of years of looking for ways to share your passion you found a venue in your community. Wishing you a fall filled with fun, community, and better-trained dog owners!
Post: When You Love What You Do. Definitely NOT a rant.
Link to comment from June 14, 2025
I would be happy if the price of gas reflected its true cost, including externalities - pollution, effects on health, climate change and related mitigation efforts. A number of studies put that cost at ~$15/gallon.
Post: A Rant about the Price of Gas, Part II: Live Experiment
Link to comment from June 13, 2025
Well said. I appreciate your putting "successful" in quotes - while those individuals may have an obscene amount of money, that is only one measure of success. And, in my view, not an important or meaningful one. I also appreciate your proposed solution. Not participating in "a system that feeds their avarice" is better for one's pocketbook, and is certainly better for the planet. Thanks for posting this comment - it's an important reminder that there are ways to channel our frustration/outrage/anger (insert your feeling here!) into actions that are productive and individually meaningful.
Post: Should we envy the super wealthy? Have they taken our piece of the pie leaving us with the crumbs? Nope! By Dick Quinn
Link to comment from June 13, 2025
There was a recent discussion on Bogleheads you might find informative. I also put the term 'liability matching portfolio' in the search box and a number of discussions with valuable information came up.
Post: How are you dealing with or plan to deal with inflation in retirement? By R Quinn
Link to comment from June 12, 2025
I don't think you're too conservative at all; as they say, personal finance is personal. And I agree that the $60,000 in guaranteed income would be nice! My thinking is that 4% isn't an aggressive amount to be drawing down. If one follows the 4% +inflation guidance from the Trinity study, the purchasing power of the income (SS + investments) stays the same. I'd be worried that a pension with no COLA would result in a decrease in real income. I think either approach has associated risks and both have pros and cons. At the end of the day, Bill and Joe are both well set-up for a wonderful retirement - however it looks to them! :)
Post: You Might Be Ready to Retire…Who Would You Rather Be?
Link to comment from June 11, 2025
I can only speak for myself, but the fact that Joe's pension has no COLA, and Bill has $1.5 million more in assets makes the choice easy. The OP asked us which scenario we'd prefer, not what we think of pensions!
Post: You Might Be Ready to Retire…Who Would You Rather Be?
Link to comment from June 11, 2025
I would much rather be Bill. I'd invest the $2,250,000 in a 70/30 portfolio of index funds (e.g., VTSAX and VTBLX) and use either the Variable Percentage Withdrawal (VPW) or Total Portfolio Allocation and Withdrawal (TPAW) to determine how much to draw down.
Post: You Might Be Ready to Retire…Who Would You Rather Be?
Link to comment from June 11, 2025
I just got back from a trip to Ireland, and also noticed, and was disappointed in, the format change to the Lonely Planet guidebook I bought. Such a bummer...
Post: Trips in your “go go” years?
Link to comment from June 10, 2025