Posted: 7/9/2026 3:38:16 PM EDT
Erin puts a lot of good information in one place here: Why Some People Become Millionaires—and Most Never Do It aligns well with research I've followed on the subject as well as personal experience. |
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| Just watched that video myself. It’s very good. Lots of good points for the average person. I’d make it mandatory watching for young adults. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By VeritatisUnus: What is considered a millionaire? Just net worth? I didn’t watch the video. Just watch the video. She explains things well. It’s worth the time. Most of what she said I either did or have done. Some I wish I had done sooner instead of listening to family members who sucked with money (but acted like they knew a lot….so like a lot of posters around here) I wish I had watched the video when I was 20 (yes I know that would have been impossible) |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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I was fortunate to grow up with parents who saved and lived well below their means. I have passed that on to my kids, and I have reinforced the idea of saving and investing onto them since they were little. (probably beginning when they were less than 5 years old) They are 20 and 16 today, both have Roth IRAs, taxable brokerage accounts, savings and checking accounts, and a CD or two. I just pray they don't fall into the trap of wanting to look successful, rather than just focusing on being successful. |
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Originally Posted By BPR: I was fortunate to grow up with parents who saved and lived well below their means. I have passed that on to my kids, and I have reinforced the idea of saving and investing onto them since they were little. (probably beginning when they were less than 5 years old) They are 20 and 16 today, both have Roth IRAs, taxable brokerage accounts, savings and checking accounts, and a CD or two. I just pray they don't fall into the trap of wanting to look successful, rather than just focusing on being successful. 
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Originally Posted By ColtRifle: Just watch the video. She explains things well. It’s worth the time. Most of what she said I either did or have done. Some I wish I had done sooner instead of listening to family members who sucked with money (but acted like they knew a lot….so like a lot of posters around here) I wish I had watched the video when I was 20 (yes I know that would have been impossible) Originally Posted By ColtRifle: Originally Posted By VeritatisUnus: What is considered a millionaire? Just net worth? I didn’t watch the video. Just watch the video. She explains things well. It’s worth the time. Most of what she said I either did or have done. Some I wish I had done sooner instead of listening to family members who sucked with money (but acted like they knew a lot….so like a lot of posters around here) I wish I had watched the video when I was 20 (yes I know that would have been impossible) AGREED. But being 52 I now know what she is saying is true, so it has perhaps a more profound impact. |
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Originally Posted By R_S: AGREED. But being 52 I now know what she is saying is true, so it has perhaps a more profound impact. I agree. I have always lived well below my means. I have never had credit card debt and bought vehicles I could afford. I fixed them myself when they broke. I’ve had a few car payments but never for long and never on luxury vehicles. We did have a 6 year loan on the wife’s car but it was 0% so didn’t see a need to pay it off early. My first house was a 2b1ba fixer upper. Made a small profit when we later sold it. Bought a lot in town very cheap and once water was run to it, we built a new house. Sold when the market was down so didn’t make a profit but we didn’t lose money either. Bought 9 acres when the market was down for a great price. Held it for years and slowly improved it with cash. Eventually built a house on it. It’s a nice house but its no mansion. But, it’s paid for. Hope to retire in 8 years. I’ll be around 57. If I make it there and things stay on track where they are now, I’ll never worry about money in retirement. I won’t be rich but I’ll be very comfortable. I wish I had started aggressively investing earlier in life but I was listening to the wrong people. I’m still in great shape but would be in even better shape if I had started sooner. I’d probably be retiring at 55 if I had started investing sooner. I know a number of people in their 50s who would love to retire but can’t. If they would have done the steps in this video early in life, it wouldn’t have been a problem to retire when they wanted to. Decisions you and I make early in life WILL affect later in life. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By ColtRifle: I agree. I have always lived well below my means. I have never had credit card debt and bought vehicles I could afford. I fixed them myself when they broke. I’ve had a few car payments but never for long and never on luxury vehicles. We did have a 6 year loan on the wife’s car but it was 0% so didn’t see a need to pay it off early. My first house was a 2b1ba fixer upper. Made a small profit when we later sold it. Bought a lot in town very cheap and once water was run to it, we built a new house. Sold when the market was down so didn’t make a profit but we didn’t lose money either. Bought 9 acres when the market was down for a great price. Held it for years and slowly improved it with cash. Eventually built a house on it. It’s a nice house but its no mansion. But, it’s paid for. Hope to retire in 8 years. I’ll be around 57. If I make it there and things stay on track where they are now, I’ll never worry about money in retirement. I won’t be rich but I’ll be very comfortable. I wish I had started aggressively investing earlier in life but I was listening to the wrong people. I’m still in great shape but would be in even better shape if I had started sooner. I’d probably be retiring at 55 if I had started investing sooner. I know a number of people in their 50s who would love to retire but can’t. If they would have done the steps in this video early in life, it wouldn’t have been a problem to retire when they wanted to. Decisions you and I make early in life WILL affect later in life. INDEED. 100% My biggest mistake was marrying my first wife who was a spender. Greatly reduced my savings rate for those years. Didn't make that mistake twice. |
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Originally Posted By autumnsong: Sarcasm? Not sure why a successful person who has a net worth of a million is sad. ? Net worth? That would mean maybe a house that is worth 600K and the rest in an IRA/ 401K? Other personal property? Is that how I read it. Doesn't seem like that will last too long after retirement. I should subtract the house. It's not like I could sell it and still have a place to live. |
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Originally Posted By VeritatisUnus: What is considered a millionaire? Just net worth? She outlines 3 ways to measure what a millionaire is. 1. Traditional net worth calculation (all assets minus all liabilites. Period.) 23.8 million adults (8.8% of US adults) 2. Investable assets net worth. (all investable assets, does not include equity in non-investment real estate, but does include retirement accounts) 14.5 million households 3. Liquid investable asset net worth (all investable assets that can be utilized without restriction, penalty, or taxes, aka "cash and cash equivalents") 6 million adults (2.2% of US adults) |
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Originally Posted By Cooper1: Net worth? That would mean maybe a house that is worth 600K and the rest in an IRA/ 401K? Other personal property? Is that how I read it. Doesn't seem like that will last too long after retirement. I should subtract the house. It's not like I could sell it and still have a place to live. Originally Posted By Cooper1: Originally Posted By autumnsong: Sarcasm? Not sure why a successful person who has a net worth of a million is sad. ? Net worth? That would mean maybe a house that is worth 600K and the rest in an IRA/ 401K? Other personal property? Is that how I read it. Doesn't seem like that will last too long after retirement. I should subtract the house. It's not like I could sell it and still have a place to live. Net worth, to me, is a mostly meaningless term. It’s interesting to see how much money I’d have if I liquidated everything….but I’m not going to liquidate everything. I remember one day a few years ago I added up the value of everything and was shocked at my net worth. But, while lack of money is not an issue for us, we also don’t have enough to buy whatever we want/whenever we want. We plan our purchases and vacations carefully to both get a good value for our money as well as to not over spend. So by some measurements, we are “rich”. But in reality, we aren’t rich. We are comfortable. My current and future income numbers are far more important to me because that tells me what I can actually spend in retirement (and spend today). And as far as the poster you are quoting….not sure how a millionaire is sad? It’s easy. I know a couple who makes somewhere above $500k per year. They spend like crazy to fill a void in their lives. Of course, that doesn’t work so they keep spending, looking for that short term dopamine hit to replace the lack of meaningful relationships in their lives. It’s sad to see. I don’t have nearly their income but I wouldn’t trade my life for theirs. They live what on the outside looks like a very luxurious life…..and are miserable. Lots of rich people commit suicide every year. They have everything they could want….except happiness. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By AR_Dale: My Dad died at 90 a millionaire without any knowledge of investing. He bought 130 acres of farm land with an old house when he was 30, 2nd mortgage at 50 because of divorce. I sold it for $1.36M in 2024. This is very rural IN, not land near a city. That's one hell of a step up in cost basis. |
| The strategy of investing portion of every raise that she touches on around the 17 minute mark might have been one of the most impactful things my wife and I ever did. It’s pretty painless since you’re not missing out on any money that you were already used to receiving. |
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Originally Posted By FALARAK: She outlines 3 ways to measure what a millionaire is. 1. Traditional net worth calculation (all assets minus all liabilites. Period.) 23.8 million adults (8.8% of US adults) 2. Investable assets net worth. (all investable assets, does not include equity in non-investment real estate, but does include retirement accounts) 14.5 million households 3. Liquid investable asset net worth (all investable assets that can be utilized without restriction, penalty, or taxes, aka "cash and cash equivalents") 6 million adults (2.2% of US adults) Originally Posted By FALARAK: Originally Posted By VeritatisUnus: What is considered a millionaire? Just net worth? She outlines 3 ways to measure what a millionaire is. 1. Traditional net worth calculation (all assets minus all liabilites. Period.) 23.8 million adults (8.8% of US adults) 2. Investable assets net worth. (all investable assets, does not include equity in non-investment real estate, but does include retirement accounts) 14.5 million households 3. Liquid investable asset net worth (all investable assets that can be utilized without restriction, penalty, or taxes, aka "cash and cash equivalents") 6 million adults (2.2% of US adults) Yes. There are probably individuals who she considers in category 2, which after taxes and penalties would still have liquid investable asset new worth of over $1M, and doesn't appear to account for Net Present Value of Pensions, but its a tougher number to calculate. |
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Originally Posted By Procat: The strategy of investing portion of every raise that she touches on around the 17 minute mark might have been one of the most impactful things my wife and I ever did. It’s pretty painless since you’re not missing out on any money that you were already used to receiving. I've used that strategy of putting raises into savings too and it is definitely a less painful way to go
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Originally Posted By R_S: Yes. There are probably individuals who she considers in category 2, which after taxes and penalties would still have liquid investable asset new worth of over $1M, and doesn't appear to account for Net Present Value of Pensions, but its a tougher number to calculate. In the various ways I’ve seen people calculate net worth I’ve never seen a serious argument for including pensions or social security. |
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Originally Posted By Procat: In the various ways I’ve seen people calculate net worth I’ve never seen a serious argument for including pensions or social security. Lots of people don’t have pensions, but would love to. So, a pension clearly has value. How you value it is up to you. Many who would love to have a pension would place a pretty high value on it if they could have one. Some with high retirement account balances have zero desire for a lowly pension. One way I’ve read to calculate it if you would like to know what you would need to roughly equal your pension in a retirement account is….take the annual amount you’ll get. If the pension has no inflation adjustment, multiply by 15. If the pension has a small inflation adjustment multiply by 20. If it has a good inflation adjustment (keeping ahead of inflation), multiply by 25. It’s clearly a different value than having the same amount in a retirement account. But, it does have value. And if you have a pension but don’t consider it as part of your net worth, well don’t calculate it. Up to you. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By FALARAK: She outlines 3 ways to measure what a millionaire is. 1. Traditional net worth calculation (all assets minus all liabilites. Period.) 23.8 million adults (8.8% of US adults) 2. Investable assets net worth. (all investable assets, does not include equity in non-investment real estate, but does include retirement accounts) 14.5 million households 3. Liquid investable asset net worth (all investable assets that can be utilized without restriction, penalty, or taxes, aka "cash and cash equivalents") 6 million adults (2.2% of US adults) Hopefully I'll be 3mil+ of V2 by 55. Between that, a pension starting at 57 and cheap medical insurance starting at 60, I'll be good for retirement. I'll just have to use the rule of 55 to access a portion of my assets until everything opens up at 59.5. |
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Originally Posted By ColtRifle: Net worth, to me, is a mostly meaningless term. That’s pretty much where I’m at with it as well. The only time I’ve found it useful is for SEC accredited investor status, other than that it’s pretty much just bragging rights. The SEC formula is always good for rustling jimmies when the topic comes up because it specifically omits primary residence and primary residence mortgage from the calculations. Since most people will gravitate towards the formula that gives them the biggest number they react predictably when told their house doesn’t count. The issue I have with including pensions is that to calculate net present value you have to make a couple assumptions. Since life expectancy and future time value of money aren’t known most people will just plug in historical averages which makes the number output essentially a guess. Conceivably if the pension had a lump sum payout option that could be reasonably included because it is known. Unfortunately most people wouldn’t like that because the number would be substantially lower than what you get applying the 4% draw down rule in reverse. I don’t personally care either way. This is just a topic I get a kick out of discussing. One of my best friends is a retired firefighter who claims his pension is the equivalent of a $8M IRA despite the fact that his monthly payments in no way justify that valuation. I’d love to see the math used in that pension fund presentation. |
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Originally Posted By Procat: That’s pretty much where I’m at with it as well. The only time I’ve found it useful is for SEC accredited investor status, other than that it’s pretty much just bragging rights. The SEC formula is always good for rustling jimmies when the topic comes up because it specifically omits primary residence and primary residence mortgage from the calculations. Since most people will gravitate towards the formula that gives them the biggest number they react predictably when told their house doesn’t count. The issue I have with including pensions is that to calculate net present value you have to make a couple assumptions. Since life expectancy and future time value of money aren’t known most people will just plug in historical averages which makes the number output essentially a guess. Conceivably if the pension had a lump sum payout option that could be reasonably included because it is known. Unfortunately most people wouldn’t like that because the number would be substantially lower than what you get applying the 4% draw down rule in reverse. I don’t personally care either way. This is just a topic I get a kick out of discussing. One of my best friends is a retired firefighter who claims his pension is the equivalent of a $8M IRA despite the fact that his monthly payments in no way justify that valuation. I’d love to see the math used in that pension fund presentation. In most cases I think it’s just so people can brag about their net worth. In planning, if you and I (assuming same age) are discussing retirement funding and I have a $20,000 per year income from a fully vested and inflation adjusted pension while you have saved $200k, we can compare and clearly, assuming everything else is equal, I am in better retirement shape. So I think it’s useful from a future planning perspective especially if you have retirement account savings as well to compare what they are worth to your pensions on a yearly basis. But overall, I don’t care what my net worth is. It just doesnt mean much. In your friend’s case, if he retired from some major city and he worked a ton of OT to boost his pension….I guess it could be possible. As you, I’m skeptical. But, it’s still a meaningless number unless you knew his yearly income and wanted to compare where you stood compared to him. |
"It behooves every man to remember that the work of the critic is of altogether secondary importance, and that, in the end, progress is accomplished by the man who does things."
Theodore Roosevelt
Theodore Roosevelt
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Originally Posted By Procat: In the various ways I’ve seen people calculate net worth I’ve never seen a serious argument for including pensions or social security. Originally Posted By Procat: Originally Posted By R_S: Yes. There are probably individuals who she considers in category 2, which after taxes and penalties would still have liquid investable asset new worth of over $1M, and doesn't appear to account for Net Present Value of Pensions, but its a tougher number to calculate. In the various ways I’ve seen people calculate net worth I’ve never seen a serious argument for including pensions or social security. At different times Boeing has made me cash offers for my Boeing pension. I imagine they would not have made the offer if they didn't think it benefited them. |
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Originally Posted By Cooper1: Net worth? That would mean maybe a house that is worth 600K and the rest in an IRA/ 401K? Other personal property? Is that how I read it. Doesn't seem like that will last too long after retirement. I should subtract the house. It's not like I could sell it and still have a place to live. Not true. You could sell your $600k home, invest the $600k, and based on the 4% rule have enough income to spend $2k per month on rent for the remainder of your life. If a home is not an asset, would you argue that two people with identical investments outside their home; one who owns his home and the other who rents have the same net worth? Net worth is not the same as the value of your retirement savings. |
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Originally Posted By VeritatisUnus: What is considered a millionaire? Just net worth? I didn’t watch the video. Assets minus liabilities. For some reason some folks have issues with this and add other variables. The bottom line is that if your assets minus your liabilities are greater that 1 million dollars you are a millionaire. The other bottom line, probably the reason folks struggle with the definition, is that being worth 1 million dollars in 2026 is far from financially secure. |
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Originally Posted By rc2: Assets minus liabilities. For some reason some folks have issues with this and add other variables. The bottom line is that if your assets minus your liabilities are greater that 1 million dollars you are a millionaire. The other bottom line, probably the reason folks struggle with the definition, is that being worth 1 million dollars in 2026 is far from financially secure. True it aint what it used to be but its still a strong position if your talking available cash/ invested assets. If you ask the average person on the street to come up with $10,000 it would be a monumental task for a large percentage. ETA: The best advice I could give any younger person would be two fold. 1. Stay under housed 2. Find a remedy for new car fever. |
There were these two fellars standin' on a bridge, a-goin' to the bathroom. One fellar said, "The water's cold" and the other fellar said, "The water's deep". I believe one fella come from Arkansas. Get it?
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Originally Posted By rvbrewer625: My dad had a pension with Eckards before CVS bought them out. His pension disappeared. So I would be nervous unless my pension was the government. My understanding is that CVS and RITE AID bought Eckerd. The Pension Benefit Guaranty Corporation (PBGC) took over the RITE AID pension with some loss of benefits with higher benefits or early retirement. It would seem there would be an excellent lawsuit if CVS stiffed your dad? |
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Having studied corporate finance I think in terms of Net Present Value (NPV) Ultimately most (legitimate) corporate business decisions are made in terms of NPV. It's a fundamental concept that allows calculations of the value of different things and comparing those calculated values drive decisions. These days a net worth $1M is perhaps enough to survive on, but not live the high life. Since FDR took office to today the dollar has lost 96-to-99% of it's value. To live like a pre-FDR millionaire you would need $25-to-$100M today. |
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Originally Posted By Cooper1: Net worth? That would mean maybe a house that is worth 600K and the rest in an IRA/ 401K? Other personal property? Is that how I read it. Doesn't seem like that will last too long after retirement. I should subtract the house. It's not like I could sell it and still have a place to live. But you could sell it and rent a place to live, especially if you downsize and didn't want to continue to maintain a house and yard. That is why the equity in your home is an asset, albeit an illiquid one. My mother liquidated everything and lives in a nursing home (memory care center.) She literally owns nothing outside her investment accounts but her wedding ring, clothing, a bit of furniture and some photos/knick-knacks that fit in her room at the facility. Edit to add: I liquidated everything as her agent via durable power of attorney. She wasn't capable of doing it herself. |
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Yeah, assets-liabilities = net worth. Period. Because anything else is just stacking the deck in your favor for the argument you are trying to make in whatever direction. I would say her definition of #3 is stupid as well, as it places a lot of older folks into the “millionaire” category who might be worse off than someone who could tap retirement accounts early, pay the penalty, and be ahead of the older person who doesn’t pay a penalty. If I have 500k in my 457b (no penalty regardless of retired age) and you have 500k in your 401k, and we are both say 50 yrs old, am I really better off if neither of us spends it anyhow? I don’t think so, I could just access the 500k easier without penalty. Big deal- that is a tax planning issue, not a net worth issue. Maybe I have 1M in my 457b, and you have 1.5M in a 401k, so even after the penalty you have more… Millionaire = net worth of 1M or more, in some fashion or another. Just because it is not “rich” or “wealthy” status anymore does not change things, since the definition is literally tied to the million number. 1M total net worth= millionaire= doing better than most of the country, but certainly not what most of us used to consider a “millionaire” to be (rich). And since we are all different ages, each of us has a different idea of that rich lifestyle that is incorrectly associated in our minds with the word millionaire. For the record, I have no idea when we hit 1M net assets. But I have been paying better attention since then. As for pensions- all you can really do is say that having a pension of say 100k yearly is equivalent to taking withdrawals from 2.5M in assets using the 4% guideline as a strict rule. But generally, once you (and your beneficiary in some cases) die, there is no asset to hand down. So a pension is just a way to reduce your required withdrawals from your investments. If NPV on the pension makes you feel better, do it, just keep it in mind as it reducing the amount you need to save for retirement. If the question is whether you should call yourself a millionaire based on a pension, I say nope, not in my view. It is an income stream, not an asset. But I would rather have an 80k a year pension than 1M in a retirement account (get both). The ideal method is to have enough in income streams that it exceeds your expenses, so you don’t need to spend down the retirement savings unless you want to…. |
a loaded gun won’t set you free, so you say…
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Originally Posted By tac556: Yeah, assets-liabilities = net worth. Period. Because anything else is just stacking the deck in your favor for the argument you are trying to make in whatever direction. I would say her definition of #3 is stupid as well, as it places a lot of older folks into the “millionaire” category who might be worse off than someone who could tap retirement accounts early, pay the penalty, and be ahead of the older person who doesn’t pay a penalty. If I have 500k in my 457b (no penalty regardless of retired age) and you have 500k in your 401k, and we are both say 50 yrs old, am I really better off if neither of us spends it anyhow? I don’t think so, I could just access the 500k easier without penalty. Big deal- that is a tax planning issue, not a net worth issue. Maybe I have 1M in my 457b, and you have 1.5M in a 401k, so even after the penalty you have more… Millionaire = net worth of 1M or more, in some fashion or another. Just because it is not “rich” or “wealthy” status anymore does not change things, since the definition is literally tied to the million number. 1M total net worth= millionaire= doing better than most of the country, but certainly not what most of us used to consider a “millionaire” to be (rich). And since we are all different ages, each of us has a different idea of that rich lifestyle that is incorrectly associated in our minds with the word millionaire. For the record, I have no idea when we hit 1M net assets. But I have been paying better attention since then. As for pensions- all you can really do is say that having a pension of say 100k yearly is equivalent to taking withdrawals from 2.5M in assets using the 4% guideline as a strict rule. But generally, once you (and your beneficiary in some cases) die, there is no asset to hand down. So a pension is just a way to reduce your required withdrawals from your investments. If NPV on the pension makes you feel better, do it, just keep it in mind as it reducing the amount you need to save for retirement. If the question is whether you should call yourself a millionaire based on a pension, I say nope, not in my view. It is an income stream, not an asset. But I would rather have an 80k a year pension than 1M in a retirement account (get both). The ideal method is to have enough in income streams that it exceeds your expenses, so you don’t need to spend down the retirement savings unless you want to…. Originally Posted By tac556: Yeah, assets-liabilities = net worth. Period. Because anything else is just stacking the deck in your favor for the argument you are trying to make in whatever direction. I would say her definition of #3 is stupid as well, as it places a lot of older folks into the “millionaire” category who might be worse off than someone who could tap retirement accounts early, pay the penalty, and be ahead of the older person who doesn’t pay a penalty. If I have 500k in my 457b (no penalty regardless of retired age) and you have 500k in your 401k, and we are both say 50 yrs old, am I really better off if neither of us spends it anyhow? I don’t think so, I could just access the 500k easier without penalty. Big deal- that is a tax planning issue, not a net worth issue. Maybe I have 1M in my 457b, and you have 1.5M in a 401k, so even after the penalty you have more… Millionaire = net worth of 1M or more, in some fashion or another. Just because it is not “rich” or “wealthy” status anymore does not change things, since the definition is literally tied to the million number. 1M total net worth= millionaire= doing better than most of the country, but certainly not what most of us used to consider a “millionaire” to be (rich). And since we are all different ages, each of us has a different idea of that rich lifestyle that is incorrectly associated in our minds with the word millionaire. For the record, I have no idea when we hit 1M net assets. But I have been paying better attention since then. As for pensions- all you can really do is say that having a pension of say 100k yearly is equivalent to taking withdrawals from 2.5M in assets using the 4% guideline as a strict rule. But generally, once you (and your beneficiary in some cases) die, there is no asset to hand down. So a pension is just a way to reduce your required withdrawals from your investments. If NPV on the pension makes you feel better, do it, just keep it in mind as it reducing the amount you need to save for retirement. If the question is whether you should call yourself a millionaire based on a pension, I say nope, not in my view. It is an income stream, not an asset. But I would rather have an 80k a year pension than 1M in a retirement account (get both). The ideal method is to have enough in income streams that it exceeds your expenses, so you don’t need to spend down the retirement savings unless you want to…. A pension is essentially an annuity. Is An Annuity an Income or an Asset? In the realm of financial planning and wealth management, annuities stand at an interesting crossroads between income streams and assets, embodying characteristics of both but often defying easy categorization into either. Understanding the dual nature of annuities—as both assets and income—can significantly impact strategic financial and estate planning. On one hand, categorizing an annuity as an asset may affect one’s net worth calculation, influencing decisions around investment allocations and risk management. On the other hand, considering annuities as part of one’s income strategy predominantly shapes retirement planning, focusing on revenue streams over asset accumulation. |
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Originally Posted By ColtRifle: Lots of people don’t have pensions, but would love to. So, a pension clearly has value. How you value it is up to you. Many who would love to have a pension would place a pretty high value on it if they could have one. Some with high retirement account balances have zero desire for a lowly pension. One way I’ve read to calculate it if you would like to know what you would need to roughly equal your pension in a retirement account is….take the annual amount you’ll get. If the pension has no inflation adjustment, multiply by 15. If the pension has a small inflation adjustment multiply by 20. If it has a good inflation adjustment (keeping ahead of inflation), multiply by 25. It’s clearly a different value than having the same amount in a retirement account. But, it does have value. And if you have a pension but don’t consider it as part of your net worth, well don’t calculate it. Up to you. Originally Posted By ColtRifle: Originally Posted By Procat: In the various ways I’ve seen people calculate net worth I’ve never seen a serious argument for including pensions or social security. Lots of people don’t have pensions, but would love to. So, a pension clearly has value. How you value it is up to you. Many who would love to have a pension would place a pretty high value on it if they could have one. Some with high retirement account balances have zero desire for a lowly pension. One way I’ve read to calculate it if you would like to know what you would need to roughly equal your pension in a retirement account is….take the annual amount you’ll get. If the pension has no inflation adjustment, multiply by 15. If the pension has a small inflation adjustment multiply by 20. If it has a good inflation adjustment (keeping ahead of inflation), multiply by 25. It’s clearly a different value than having the same amount in a retirement account. But, it does have value. And if you have a pension but don’t consider it as part of your net worth, well don’t calculate it. Up to you. My pension, work health care coverage, [including a lump sum yearly after MC kicks in to cover SS additional plans] and SS is more then enough to live fine and still save a decent chunk of it without ever touching anything else in my investments and just rolling things over until I HAVE to start pulling some out. Not owing on anything means my living expenses are quite low compared to people that have outstanding house, vehicle, and CC debt. And you really do, for the most part, slow down on buying stupid expensive stuff as you age and realize you really don't need it. If you can't, then you'll be greeting people at Walmart even after retirement of some sort. [voluntary or involuntary] Sure there is stuff I still want but I also know I won't use it much and the cost of ownership outweighs the ''want.'' |
Liberals are a curious mix of communism and fascism, they want to destroy you but want to use your own money to do it.
I'm getting down to the last box, the others have all been destroyed...
I'm getting down to the last box, the others have all been destroyed...
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Originally Posted By R_S:A pension is essentially an annuity. Other pensions (most notably the federal government and military) cannot be paid out as a lump sum. Nit picking over verbiage is silly. What’s important is to know the rules regarding any pensions or annuities you have. Survivor benefits (if any) are extremely important to know about for planning purposes. |