Poll: What level of net worth do you intend to / did you retire with?

[robohorn]

Net worth is a tricky subject to me. It looks good on paper but sometimes you can’t easily access it. Say you have a 1.5M home that you only owe 100k on. That is 1.4M in the clear but unless you refinance (and give more money away) or do a Home Equity line of credit you can’t really touch it. If it is not your primary home you normally can’t even do the HELOC. So unless you sell that house it is better on paper but doesn’t totally help in retirement.

I agree with Nutty that net worth is not the best indicator of someone being “retirement ready”. For example, using a multiplier of 15 or higher times one’s net annual income need (after deducting Social Security, pensions, royalties, etc) gives a decent indication of the MV needed in target assets at retirement that will produce the net annual income need. Obviously, the earlier age of one’s retirement will warrant a higher multiplier. Net worth can be very misleading due to significant value potentially in illiquid, non-income producing assets.

 

[ATRumbler]

The more than $8 mil is by far the most popular answer.

That’s hilarious.

 

[Boston Horn]

Necro bump to see how we're feeling with stonks at all time highs

From what I’ve seen, of the people who focus on making money, they generally fall into three categories: 1) those who use it to keep score, (2) those who are afraid to death of not being able to support themseves or their family, and (3) those who spend it. There are of course ppl who do not care about money, and there are ppl who make a lot of money simply doing what they love - I’m not talking about them. The first two will will never have enough money; you’ll always want to run up the score, or you’ll always be afraid a rogue wave will come and wipe you out. I remember being in the bullpen as an analyst and we would talk about this, guessing how much the MDs were worth. We all agreed $2mm was an unimaginable bounty. Then a few years later it became $5mm, then for a while consensus was $10mm, now it is generally $20mm.

Where I struggle on this question is the value of the dollar. The US has taken on a massive amount of debt. The only way it can get out of this hole is 1) to keep rates low in order to keep Interest Expense muted, and 2) to dilute its currency (to effectively lower the principal amount). As an example of the power of dilution on a micro scale, if you bought a house in the 1950s, your entire mortgage was somewhere around $5k depending on location; that’s just 2 months of P&I on the same house today. Dilution makes it easier to pay off the debt (a $250k mortgage today will be peanuts, just 2 months of P&I 60yrs from now). The price of real assets will likely sky rocket (in USD terms; I.e. less bang for the buck); fueled by free money and devalued currency. Wages and cost of goods will remain muted, so traditional inflation metrics won’t apply here. Those who rent, or who buy without effectively using the cheap leverage, will not be able to keep up with others on a relative basis. So if I have $10mm today, it can buy a certain kind of property and lifestyle, but as the dollar continues to get devalued (diluted), what will it buy in 20yrs? 40yrs? Especially if I’m drawing down 4% of the principal per year over that period, and generally investing that money “safely” (<4% return per annum) where I am getting diluted on a real basis

 

[KenBone]

Market has been very good to me since I answered last. Raised my number $1 million...didn’t make $1 million in that time, but between the stock market and Austin real estate, I’m feeling pretty comfortable with the revision. But as others have mentioned, I’ll need to have a higher number to just keep up if I want to live a similar lifestyle as I do now.

 

[solman1972]

From what I’ve seen, of the people who focus on making money, they generally fall into three categories: 1) those who use it to keep score, (2) those who are afraid to death of not being able to support themseves or their family, and (3) those who spend it. There are of course ppl who do not care about money, and there are ppl who make a lot of money simply doing what they love - I’m not talking about them. The first two will will never have enough money; you’ll always want to run up the score, or you’ll always be afraid a rogue wave will come and wipe you out. I remember being in the bullpen as an analyst and we would talk about this, guessing how much the MDs were worth. We all agreed $2mm was an unimaginable bounty. Then a few years later it became $5mm, then for a while consensus was $10mm, now it is generally $20mm.

Where I struggle on this question is the value of the dollar. The US has taken on a massive amount of debt. The only way it can get out of this hole is 1) to keep rates low in order to keep Interest Expense muted, and 2) to dilute its currency (to effectively lower the principal amount). As an example of the power of dilution on a micro scale, if you bought a house in the 1950s, your entire mortgage was somewhere around $5k depending on location; that’s just 2 months of P&I on the same house today. Dilution makes it easier to pay off the debt (a $250k mortgage today will be peanuts, just 2 months of P&I 60yrs from now). The price of real assets will likely sky rocket (in USD terms; I.e. less bang for the buck); fueled by free money and devalued currency. Wages and cost of goods will remain muted, so traditional inflation metrics won’t apply here. Those who rent, or who buy without effectively using the cheap leverage, will not be able to keep up with others on a relative basis. So if I have $10mm today, it can buy a certain kind of property and lifestyle, but as the dollar continues to get devalued (diluted), what will it buy in 20yrs? 40yrs? Especially if I’m drawing down 4% of the principal per year over that period, and generally investing that money “safely” (<4% return per annum) where I am getting diluted on a real basis

This is depressing but makes sense.

 

[TilGabriel]

From what I’ve seen, of the people who focus on making money, they generally fall into three categories: 1) those who use it to keep score, (2) those who are afraid to death of not being able to support themseves or their family, and (3) those who spend it. There are of course ppl who do not care about money, and there are ppl who make a lot of money simply doing what they love - I’m not talking about them. The first two will will never have enough money; you’ll always want to run up the score, or you’ll always be afraid a rogue wave will come and wipe you out. I remember being in the bullpen as an analyst and we would talk about this, guessing how much the MDs were worth. We all agreed $2mm was an unimaginable bounty. Then a few years later it became $5mm, then for a while consensus was $10mm, now it is generally $20mm.

Where I struggle on this question is the value of the dollar. The US has taken on a massive amount of debt. The only way it can get out of this hole is 1) to keep rates low in order to keep Interest Expense muted, and 2) to dilute its currency (to effectively lower the principal amount). As an example of the power of dilution on a micro scale, if you bought a house in the 1950s, your entire mortgage was somewhere around $5k depending on location; that’s just 2 months of P&I on the same house today. Dilution makes it easier to pay off the debt (a $250k mortgage today will be peanuts, just 2 months of P&I 60yrs from now). The price of real assets will likely sky rocket (in USD terms; I.e. less bang for the buck); fueled by free money and devalued currency. Wages and cost of goods will remain muted, so traditional inflation metrics won’t apply here. Those who rent, or who buy without effectively using the cheap leverage, will not be able to keep up with others on a relative basis. So if I have $10mm today, it can buy a certain kind of property and lifestyle, but as the dollar continues to get devalued (diluted), what will it buy in 20yrs? 40yrs? Especially if I’m drawing down 4% of the principal per year over that period, and generally investing that money “safely” (<4% return per annum) where I am getting diluted on a real basis

Agree with this a lot. Of you don’t take advantage of the low cost of capital and invest in the real, you’re missing the game as it is to be played given these circumstances.

 

[batcity]

I’m 44 and my goal is to retire or semi-retire by 60. I will have my house and all company property paid off well before then. I also have a couple rental properties already paid off that generate some income. Likely will add more soon. I might not sell the business as it may provide some additional monthly income and health insurance, which will be expensive otherwise. My long-term goal is to make enough money off property rentals to cover monthly expenses and not have to touch savings. Kids should be self sufficient by 2035 and we can downsize our existing house to pay for a smaller domestic residence and a place in Europe where we plan to live half the time. The focus now is on building assets that can provide a steady ROI down the road to finance retirement lifestyle. Savings and assets that can be liquidated are just safeguards.

 

[TexasLawnghorn]

I’ve always thought $6 million in liquid assets invested in tax-free munis spinning off $240-$300k of net income should be sufficient. That’s my FU number.

 

[Malibusmostwanted]

Rule of thumb is 25 times your paycheck.

 

[OwlsAndHorns]

I’ve always thought $6 million in liquid assets invested in tax-free munis spinning off $240-$300k of net income should be sufficient. That’s my FU number.

Well, $6 million in tax free munis would currently kick out the lavish sum of $65,000 a year.

Quite the conundrum.. Bonds at negative returns after inflation are a shitty head wind for retirees.

 

[Type O]

I always thought $7m at 65 would be needed.

Kinda worried that is the second number from the top....

It all depends on the standard of living you want once retired. For a reasonable SOL (middle-class), and if you plan to have your house paid off at retirement, and expect 15-20 years before you die, you need $1.5MM. If you are married, double that.

 

[Carp888]

My divorce at 40 obliterated any thoughts of retirement or financial freedom considering I won’t live to see 65, I’ve essentially stopped retirement planning (or worrying about it) and will just live paycheck to paycheck for the 20 or so years I have left.

Do you have a condition or something Sendero? Or are you just forecasting based on beating up your body like I’ve beat up mine? I’ll make 70 but I don’t think I’ll see 80.

 

[rgvhorn 89]

Many posters here talk of paying off all their debt. That might not maximize your net worth. You should instead compare the interest rate paid on that debt, to the rate you could earn by investing those same dollars. If the rate on the debt is less than what you could earn by investing the same amount, you maintain the debt. If the reverse is true, you liquidate the debt.

We moved to California four years ago. Last year we bought a 1923 house in Los Feliz (Los Angeles) and are in the process of a complete renovation. We bought the house at significantly under appraised value, and are using cash from the sale of our first home out here to fund the renovation because of the “rules” around home equity loans. (We were selling just as COVID was kicking in, so we ended up selling the house for a little less than we were initially selling it for, but wanted to get going on the renovation.). Once we’re done, and assuming mortgage rates are at a similar level, we’ll do a cash-out refinancing and bank it.

When I was doing my first interview with my CEO, we were talking about real estate. I had moved out here after living in Harlingen ($107/sq.ft. for real estate) and Greenville, NC ($123/sq.ft.), and clearly had sticker shock. He said don’t think of real estate out here in the same way. In all honesty , you kind of throw up the first time you make a house payment, but your appreciation outpaces your cash outflow (or close to it), plus you get the deduction. (Knock on wood.) Maybe the best advice I’ve ever gotten.

We’ll never retire out here, but we should be in good shape to move back to Texas or eastern Tennessee/western North Carolina and be able to pay cash for a place.

 

[rgvhorn 89]

Also, if you can put about 3 years of required annual income for your living expenses in cash before you retire, you can use that cash if the markets go down for 3 years so you don't have to dip into your principle portfolio, i.e. so you don't have to sell any stocks/funds/bonds etc. The key is planning ahead and have a strategy for worst and best case scenarios.

This x 100. I read a bunch of stuff on “sequence of returns” a few years ago, and one of the things that is clear is you have to have enough cash to never have to take out money in a “down” market.

 

[rgvhorn 89]

That's interesting. I drive a 15 year old car, will drive it until it drops dead. I take very good care of it though, and I don't drive it much since I've worked from home for over 20 years. Like you, my wife (from Nam) and I splurge on food, we don't go out a lot but when we do, we like to eat well. We also have a generous wine budget, yes a wine budget, otherwise we cook at home.

We don't really splurge on other things, we invest in real estate, of course there are costs with real estate that we offset with some income, but we buy in good areas that have high potential growth in value. If we ever get in a pinch, we will sell those assets.

I have a friend who's a plastic surgeon, very successful at it, but he drives a used Camry, he thinks buying expensive cars is a waste too. But you know, I think everyone should have the choice to spend their money on what they love if they can afford it, you can't take it with you, you can only leave it behind for someone else to spend.

It’s funny what people value. About 15 years ago, my wife and I decided to not have kids. Long story there, but when we talked about it, we said (somewhat jokingly) that we’d just take the money we’d spend on kids and drive nice cars, take nice vacations, etc. I guess that’s what we do, although my wife is extremely practical (almost cheap, at least relatively) with her automobile choices.

And agree 100% with the idea you can’t take it with you.

Great thread.

 

[sendero95]

Do you have a condition or something Sendero? Or are you just forecasting based on beating up your body like I’ve beat up mine? I’ll make 70 but I don’t think I’ll see 80.

I’ve had a recurring dreams since childhood of early death but mainly it centers around the fact that I’m virtually made of spare parts so my genes aren’t doing me any favors. I haven’t done myself any favors with booze and bad food either. I’ve come to grips with it...I’m not sure I have any interest in life after 65 anyway.

 

[meeotch]

The base number that I needed to cover my expenses and life back then was about $8,000/mo. My income back then exceed that by enough to live the life that I enjoy living. That is still close to my number today. I retired around 33 yrs old and periodically did “projects” where I built a building, hit the lecture circuit, or did a little business consulting. I know what rich is and I’m not rich; just comfortable.

Another part of this equation is that one has to live within their means. If you need a big life, then you will require a big income. I’m not suggesting one retire while working the plan. The key is establishing multiple income streams which include salary income plus lease income until you reach a point that you want to retire and a cash flow that allows for it. If you live modestly, like I do, you can retire young and live life.

Some professions are almost like retirement, like yours. You can do what you do and what I’m suggesting for your entire life if you choose to.

My wife and I had six children and I wanted to be there to raise them so I was very aggressive in this plan have three commercial buildings by the time I was 32. That allowed me to scale back and enjoy raising my family.

Maybe it’s not for everyone because you have to be comfortable carrying a lot of debt until your tenants pay it down for you. There were times when I owed millions and would wake up at night in sweats praying it would work out. But I always knew that I could also sell a property and still make good money if I had to. Fortunately, I never did.

The third part of my equation was to build each building myself. I acted as the GC. I did this to maximize my equity at completion. I negotiated every contract with ever subcontractor and got 3-5 bids on everything. It’s amazing the level of disparity in bidding when you get multiple bids.

Lastly, I avoided the nice house and fancy cars and lived in a shithole for years as I began this process. People ask me all the time if I would guide them and he them get started. I say sure. They say what do I do first, and I reply, sell your house. You can’t have big debt in two places. Your debt needs to earn you money, not cost you. That conversation usually ends with them saying, my wife would never go for it and that ends that.

Anyway, I’ve got some tractor work to do to get ready for dove season. I’ll check into this thread later.

What did you do for health insurance for yourself and the family?

 

[snouthorn]

I am an an equity partner at a law firm. If you had asked me ten years ago about retirement I would have told you it could not get here fast enough. But my career has morphed into something I really enjoy. I head the litigation section for the firm. We have offices in Houston, Dallas, San Antonio and Austin. I live in Austin and my office is three minutes from my home. I have a ton of freedom to do what I want in terms of which cases I take on because I am the one who assigns cases for the section. Now that things happen so much via zoom, I have even more freedom. I can take a three week vacation and still be plugged in as needed. So all of that being said, I am not a slave to a number in the future because I don’t feel the need to retire because I am miserable at my job. I really love it. I just turned 49 and I am thinking I will end up at the 7-9M range but it depends on a lot of factors. We will be debt free in about 10 years. The only thing I owe on is my home. But again I could see myself working until 70 plus if I still enjoy what I am doing. Sitting around doing nothing sounds great until you do it for a few days then I am bored to death.

 

[Cali-Horn]

Just curious how many believe social security will be around in say 20 years or so?

 

[DallasKid]

Maybe I should have extended the poll further... $8 million is the top 1% of net worth nationally. Reckoned OB was full of ballers but maybe I misread just how loaded this board really is!

Loaded with BS.

 

[SynTex1]

I am an an equity partner at a law firm. If you had asked me ten years ago about retirement I would have told you it could not get here fast enough. But my career has morphed into something I really enjoy. I head the litigation section for the firm. We have offices in Houston, Dallas, San Antonio and Austin. I live in Austin and my office is three minutes from my home. I have a ton of freedom to do what I want in terms of which cases I take on because I am the one who assigns cases for the section. Now that things happen so much via zoom, I have even more freedom. I can take a three week vacation and still be plugged in as needed. So all of that being said, I am not a slave to a number in the future because I don’t feel the need to retire because I am miserable at my job. I really love it. I just turned 49 and I am thinking I will end up at the 7-9M range but it depends on a lot of factors. We will be debt free in about 10 years. The only thing I owe on is my home. But again I could see myself working until 70 plus if I still enjoy what I am doing. Sitting around doing nothing sounds great until you do it for a few days then I am bored to death.

$7 to $9 million feels like a great landing spot. Even if your hypothetical "risk-free" rate of return is dogshit (as @OwlsAndHorns astutely notes given pathetic bond yields), you could earn 0% and straight line depreciate your prinicpal at a huge slug for many years. Sadly, I feel like $7 to $9 million in 2020 as the safe number is what used to be $3 to $4 million back in 2000. And we've had pretty tepid returns in stocks to try and use as a headwind, relatively speaking, compared to the roaring Nineties.

 

[SynTex1]

Just curious how many believe social security will be around in say 20 years or so?

Very important question. Even if it's still "around," I worry it'll get morphed to phase out for wealthier people and become quasi-welfare. How many people are counting on SS as an annuity on top of their net worth? I personally am not.

 

[rgvhorn 89]

Just curious how many believe social security will be around in say 20 years or so?

It’ll be around. It’d be political suicide for anyone that significantly cut Social Security, and these politicians (both parties) won’t do anything that will jeopardize their re-election.

 

[Cali-Horn]

Very important question. Even if it's still "around," I worry it'll get morphed to phase out for wealthier people and become quasi-welfare. How many people are counting on SS as an annuity on top of their net worth? I personally am not.

If I do I'm all set to retire on just a few million dollars b/c of that and some passive income I'll get from family estate stuff. I've visited the IRS social security estimating tool and looks like I'm entitled to around $4k per month if I don't start taking anything out until I'm 72.

 

[Texas Texas]

Just curious how many believe social security will be around in say 20 years or so?

It’s not in my retirement plan at all. I’m assuming they will add some form of means testing to it that will take it away from me. So if I get anything from social security, I’ll treat it as a windfall.

 

[Texas Texas]

The more than $8 mil is by far the most popular answer.

That’s hilarious.

It would be interesting for sure to see what the results looked like with numbers up to say $20 million plus.

To me though, it doesn’t seem super surprising that people here would set their goals high. Most here have college degrees from UT, and some have grad degrees from UT. Also those who are drawn to a net worth thread are likely to be more focused on financial success than the average person. So comparing these results against the 1% national average number for wealth over $8 million is not really an accurate comparison. With only about a third of the country having a college degree, this site is going to have way different numbers than the national averages in all socioeconomic metrics.

With 12k plus subscribers here, the 288 current $8 million+ votes number is around 2.4% of the overall subscriber base. That doesn’t seem too shocking to me.

 

[sendero95]

Just curious how many believe social security will be around in say 20 years or so?

It will be around but it’s one pocket to another and praying there isn’t a big hole in the first pocket, at best. I’m a poor and I don’t even count on it.

 

[1253]

I am an an equity partner at a law firm. If you had asked me ten years ago about retirement I would have told you it could not get here fast enough. But my career has morphed into something I really enjoy. I head the litigation section for the firm. We have offices in Houston, Dallas, San Antonio and Austin. I live in Austin and my office is three minutes from my home. I have a ton of freedom to do what I want in terms of which cases I take on because I am the one who assigns cases for the section. Now that things happen so much via zoom, I have even more freedom. I can take a three week vacation and still be plugged in as needed. So all of that being said, I am not a slave to a number in the future because I don’t feel the need to retire because I am miserable at my job. I really love it. I just turned 49 and I am thinking I will end up at the 7-9M range but it depends on a lot of factors. We will be debt free in about 10 years. The only thing I owe on is my home. But again I could see myself working until 70 plus if I still enjoy what I am doing. Sitting around doing nothing sounds great until you do it for a few days then I am bored to death.

I know quite a few successful attorneys and only one has retired...I wonder why that is? I will tell you that I was having lunch with the one that retired at 70, he was 72 at the time, and I was contemplating retirement down the road and asked him if he wished he would have retired earlier and he did not hesitate with a quick and resounding, “Yes!” followed by, “I made the mistake of letting my partners convince me to stay on each year for too many years.”. I then asked how much earlier and he replied, “The day I thought I had enough money to get out!”. He was very successful and one of, if not the best transactional real estate attorneys in Texas. His wife made a ton of money too. I think what he quickly recognized at 70 was that the machine was just not as strong and energetic as he had hoped it would be, and the runway looks a lot shorter at 70. The conversation with him that day caused me to hang em up early and I have enjoyed every day of it.

 

[satterwm]

I am an an equity partner at a law firm. If you had asked me ten years ago about retirement I would have told you it could not get here fast enough. But my career has morphed into something I really enjoy. I head the litigation section for the firm. We have offices in Houston, Dallas, San Antonio and Austin. I live in Austin and my office is three minutes from my home. I have a ton of freedom to do what I want in terms of which cases I take on because I am the one who assigns cases for the section. Now that things happen so much via zoom, I have even more freedom. I can take a three week vacation and still be plugged in as needed. So all of that being said, I am not a slave to a number in the future because I don’t feel the need to retire because I am miserable at my job. I really love it. I just turned 49 and I am thinking I will end up at the 7-9M range but it depends on a lot of factors. We will be debt free in about 10 years. The only thing I owe on is my home. But again I could see myself working until 70 plus if I still enjoy what I am doing. Sitting around doing nothing sounds great until you do it for a few days then I am bored to death.

I have been in the financial advice business a long time--you are in the sweet spot in your career, and in your take on things.

If I may add to that, you have little reason to attempt to pay off your home. Borrowing at current rates to own an appreciating asset is a financial arbitrage you should not miss out on. The math is compelling over time. You will be paying the debt off with tomorrow's $$ which will be worth less due to inflation.

Sensible leverage can be a powerful wealth-builder in inflationary times, if combined with sensible investing.

 

[1253]

A lot of the most popular dividend investments are centered around commercial real estate. COVID-19 and technology seem likely to disrupt that sector in fundamental ways.

Disagree “all” commercial real estate will be disrupted. Much of it will go up significantly and soon. It is important, however, to recognize that distributions from REIT investments are taxed as ordinary income.

 

[hornsup21]

I think you are much more extraordinary than you know RevHorn. And I don't mean starting with 100k, because I actually think that plenty of folks on this board can scratch that together.

But you picked property, which would be an extraordinarily nerve wracking decision for most. And you built something, which most people have not done. You had a business plan and executed it.

That type of activity is not for most people. Most people like to be told what to do, they don't stick their necks out like you did. You had capital, vision and the ability to execute.

You are rare.

According to @mikemc69 and @Armadillo Slim ,(Leo) @Reverent Horn can cook his ass off too!

 

[Carp888]

I’ve had a recurring dreams since childhood of early death but mainly it centers around the fact that I’m virtually made of spare parts so my genes aren’t doing me any favors. I haven’t done myself any favors with booze and bad food either. I’ve come to grips with it...I’m not sure I have any interest in life after 65 anyway.

We have some similarities in all that, but my projection is further. Once I can't do what I want to do when I want to do it I'm done.

 

[holyquocamole]

Appreciate that. Finding “good guys” is hard. I have an asset manager in Dallas. I say “manager” because their strategy is fairly consistent with other advisor/managers. While working, I just sent them money monthly/annually and let them invest it consistent with their institutions’ strategy. That worked really well over my career as the market, as whole, was a really good place to invest, especially during the last 10 years of my career, which from a timing standpoint was awesome.
Last thing, I am having to spend a lot more time in retirement managing my investment strategy than I had anticipated...like a few hours each day. I went from 100% equities to kind of a 50%/50% portfolio and the fixed income aspect has been time consuming. You can no longer just park those dollars in a fixed income fund and take a lap. And investing right now is scary as hell.

Can you share your asset manager's contact info? Thanks!

 

[Royal Soil]

Two things people talk about, their sex life and their net worth where they seldom tell the truth. 😄

 

[1253]

Can you share your asset manager's contact info? Thanks!

Westwood Trust...located in the Crescent., they are publicly traded. Just know they are primarily value investors and IMO geared toward passive investing for individuals....think diversified and value. They have their own funds and analysts. They also have a sizable institutional book. I have moved 50% of my business this year, the equity portfolio, and manage it myself through Fidelity, Westwood has the bond and convertible arbitrage investments. They are good trustworthy folks.