Financial security is relative to your situation. During my working years, I struggled to show financial security to the family with a modest home, cars, college funding, vacations, etc. We saved and invested with a goal of traveling in retirement, making up for all those staycations. Retirement started well, we spent two years traveling across the country. But in the year since my wife died, I have found that financial security is not a concern as much as learning to live as a single rather than a couple.
What I need to be financially secure would be: No debt, enough passive income (incl SS, wife’s pension, interest, etc) to cover all normal monthly household expenses. To be able to splurge on a new car or a vacation, or a new living room set if desired. I’ve worked for 55 years and retired when I turned 70. (Yes, I started working at age 15 in CT with a work permit. It was simple, no job meant no money). I’ve been officially retired for one year in August. So far, we haven’t had to touch our savings which aren’t “huge” but do put us in the top 15% of households in terms of total wealth. I never talk to anyone about our financial condition because most around me have far, far less and those who have more don’t really care. I love HD as I read about others mistakes and successes and what they learned. I too, have learned so much from HD writers & readers and most of all, Jonathan Clements! Even thought I “should be” comfortable being financially secure in a sense, I still worry about money and how we will be in the future. Growing up with nothing and having the State of Conn as my legal guardian, I have a tenacious desire to always save and never spend more than I earn. They say when you have a lifelong habit of always saving then it becomes difficult to flip the switch and start spending what you have saved. Very true for me. Anyway, this is my first comment on the new HD Forum. I continue to desire to learn from others. Thanks!
In retirement at least, financial security would ensure enough guaranteed income to meet your fixed, monthly expenses.
Guaranteed income can consist of Social Security, a pension, and if not sufficient, one or more fixed, lifetime immediate annuities. You could also consider a ladder of individual bonds held to maturity, but if you’re still kicking after you’ve reached the last rung, that source of income disappears.
If you’re confident you can meet your monthly expenses without regard for what the stock market is doing, that should go a long way towards feeling financially secure.
What do I need? Two things. Both quite simple and straightforward, really.
Single-payer total healthcare coverage with low or no monthly premium for the rest of my life, including skilled nursing care if needed during my last few years.
Social Security income coverage that provides a reliable, inflation-adjusted source of income for the rest of my life, with the added ability for me to buy more of it from my savings if the amount the Fed currently says I earned isn’t enough to cover my monthly living expenses.
I’m reminded of the Chinese proverb: “Be careful what you wish for. It might come true.”
Single-payer healthcare coverage with low or no monthly payments sounds good. But if we use Britain’s National Health Service as an example, the quality of the health care you receive will likely disappoint. If the government squeezes the health care industry to keep costs down, what will happen to innovation giving us new medicines and treatments for serious diseases?
Being able to buy more Social Security violates the structure of the program which depends on contributions from current workers. The private insurance industry stopped offering CPI-indexed annuities because they aren’t profitable. If government offered such a product, you would likely see your taxes rise significantly to pay for it. It’s doubtful you would find yourself ahead financially.
Some lucky ones are fortunate to go through life without a hitch – the car always runs, the job is good, boss is good, co-workers are good, health is good, kids are good, marriage is good, house is in the right neighborhood and never has problems, investments always growing, and everybody loves you. Many are less fortunate, less “lucky”, and have to struggle with life. Frequently both types are in the same family. Or you could be born in a third world country with no advantages.
Feeling that both I and my close relatives are in a good position to be self-supporting and to help each other out in dire emergencies is what I need to feel financially secure. Health, education, employment, and savings all play a role in that feeling.
In my twenties, I obtained a decent job with a stable employer. I made a deal with my parents to pay them rent for a year, so I could start paying down student loans and save for furniture and deposits on apartment and utilities. My father became seriously ill. My mother couldn’t work because my father needed care. My brother was struggling to establish a legal practice. My parents had a mortgage; my parents and my brother had car payments; my brother and I had student loans. Our combined savings was less than $5,000. I went from feeling somewhat financially secure with my new job to constantly worried about money during the year it took to get my father’s health stabilized and get him approved for disability.
Twenty years later, when my mother needed to move to assisted living, I was only slightly concerned about money. She had no debt, social security, and a tiny pension. My brother and I discussed our family budgets, figured out where we could cut back, and were able to pay for assisted living without being in a hurry to sell our mother’s house.
That’s financial security, when I can support myself, prepare for retirement and emergencies, be able to help out family in a dire emergency without much stress, and know that my nearest family are also self-supporting and preparing for retirement and emergencies.
I wouldn’t mind a couple of million dollars, but I don’t need it to feel financially secure.
A steady, low-risk full time job with benefits is probably the biggest thing. Since leaving my 9-5 six months ago, my net worth has grown nicely and I have a good self-employment income, but I feel less secure now than at any time in the last several years.
Also, since I’m 33yo, there is just so much time left in life and a wide range of possible outcomes. If I were generally healthy, married, owning a house at age 70 with Social Security on the doorstep, I’d probably feel more secure since I’m closer to the end and know that SS will provide a nice annuity. Kind of morbid, but that’s how I see risk right now.
I wish I knew. If most people looked at my income, my assets and my lack of debt I suspect they would say you are totally secure. But I don’t feel that way and probably never will. I’m always looking for what if’s that could derail the status quo. Have I accounted for every possible contingency? I try.
Not having to worry if we can afford anything that comes up.
Financial security is relative to your situation. During my working years, I struggled to show financial security to the family with a modest home, cars, college funding, vacations, etc. We saved and invested with a goal of traveling in retirement, making up for all those staycations. Retirement started well, we spent two years traveling across the country. But in the year since my wife died, I have found that financial security is not a concern as much as learning to live as a single rather than a couple.
A crystal ball but then where’s the fun in that 🙂
What I need to be financially secure would be: No debt, enough passive income (incl SS, wife’s pension, interest, etc) to cover all normal monthly household expenses. To be able to splurge on a new car or a vacation, or a new living room set if desired. I’ve worked for 55 years and retired when I turned 70. (Yes, I started working at age 15 in CT with a work permit. It was simple, no job meant no money). I’ve been officially retired for one year in August. So far, we haven’t had to touch our savings which aren’t “huge” but do put us in the top 15% of households in terms of total wealth. I never talk to anyone about our financial condition because most around me have far, far less and those who have more don’t really care. I love HD as I read about others mistakes and successes and what they learned. I too, have learned so much from HD writers & readers and most of all, Jonathan Clements! Even thought I “should be” comfortable being financially secure in a sense, I still worry about money and how we will be in the future. Growing up with nothing and having the State of Conn as my legal guardian, I have a tenacious desire to always save and never spend more than I earn. They say when you have a lifelong habit of always saving then it becomes difficult to flip the switch and start spending what you have saved. Very true for me. Anyway, this is my first comment on the new HD Forum. I continue to desire to learn from others. Thanks!
https://www.financialsamurai.com/once-you-have-f-you-money-its-hard-to-tell-others-to-f-off/
25 times my annual expenses.
My health. If I am healthy then I feel wealthy because I know that I can always get a job.
An adequate emergency fund, low fixed expenses, owning our home outright.
Emotional maturity. Without that, I will never feel financially secure no matter how much I have.
In retirement at least, financial security would ensure enough guaranteed income to meet your fixed, monthly expenses.
Guaranteed income can consist of Social Security, a pension, and if not sufficient, one or more fixed, lifetime immediate annuities. You could also consider a ladder of individual bonds held to maturity, but if you’re still kicking after you’ve reached the last rung, that source of income disappears.
If you’re confident you can meet your monthly expenses without regard for what the stock market is doing, that should go a long way towards feeling financially secure.
What do I need? Two things. Both quite simple and straightforward, really.
I’m reminded of the Chinese proverb: “Be careful what you wish for. It might come true.”
Single-payer healthcare coverage with low or no monthly payments sounds good. But if we use Britain’s National Health Service as an example, the quality of the health care you receive will likely disappoint. If the government squeezes the health care industry to keep costs down, what will happen to innovation giving us new medicines and treatments for serious diseases?
Being able to buy more Social Security violates the structure of the program which depends on contributions from current workers. The private insurance industry stopped offering CPI-indexed annuities because they aren’t profitable. If government offered such a product, you would likely see your taxes rise significantly to pay for it. It’s doubtful you would find yourself ahead financially.
Just a little bit more. No matter how much money you have, everything we be so much better if you had just a little bit more.
A printing press.
Some lucky ones are fortunate to go through life without a hitch – the car always runs, the job is good, boss is good, co-workers are good, health is good, kids are good, marriage is good, house is in the right neighborhood and never has problems, investments always growing, and everybody loves you.
Many are less fortunate, less “lucky”, and have to struggle with life.
Frequently both types are in the same family.
Or you could be born in a third world country with no advantages.
Income should be 20% higher than expenses, and zero debt. Hum? . . Yes, the math seems to work.
Feeling that both I and my close relatives are in a good position to be self-supporting and to help each other out in dire emergencies is what I need to feel financially secure. Health, education, employment, and savings all play a role in that feeling.
In my twenties, I obtained a decent job with a stable employer. I made a deal with my parents to pay them rent for a year, so I could start paying down student loans and save for furniture and deposits on apartment and utilities. My father became seriously ill. My mother couldn’t work because my father needed care. My brother was struggling to establish a legal practice. My parents had a mortgage; my parents and my brother had car payments; my brother and I had student loans. Our combined savings was less than $5,000. I went from feeling somewhat financially secure with my new job to constantly worried about money during the year it took to get my father’s health stabilized and get him approved for disability.
Twenty years later, when my mother needed to move to assisted living, I was only slightly concerned about money. She had no debt, social security, and a tiny pension. My brother and I discussed our family budgets, figured out where we could cut back, and were able to pay for assisted living without being in a hurry to sell our mother’s house.
That’s financial security, when I can support myself, prepare for retirement and emergencies, be able to help out family in a dire emergency without much stress, and know that my nearest family are also self-supporting and preparing for retirement and emergencies.
I wouldn’t mind a couple of million dollars, but I don’t need it to feel financially secure.
A steady, low-risk full time job with benefits is probably the biggest thing. Since leaving my 9-5 six months ago, my net worth has grown nicely and I have a good self-employment income, but I feel less secure now than at any time in the last several years.
Also, since I’m 33yo, there is just so much time left in life and a wide range of possible outcomes. If I were generally healthy, married, owning a house at age 70 with Social Security on the doorstep, I’d probably feel more secure since I’m closer to the end and know that SS will provide a nice annuity. Kind of morbid, but that’s how I see risk right now.
And I like Rick’s response below!
I wish I knew. If most people looked at my income, my assets and my lack of debt I suspect they would say you are totally secure. But I don’t feel that way and probably never will. I’m always looking for what if’s that could derail the status quo. Have I accounted for every possible contingency? I try.
I think this changes as you grow older.
Add in good health along the way; the whole way.