WaPo on Net Worth

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

I hadn't give this much thought before - but I think I would include 529 in net worth until it leaves your control and goes to the college.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

But it’s not spent. It’s in an investment account. The kids may not go to college, or choose a state school or a military academy, etc. We have savings for future cars and home improvements too but until we buy those things, that money is part of our net worth.

[Anonymous]

Anonymous wrote:I don’t want to pay to get past the firewall. I’m worth $7.3 million. Where does that place me?

97th percentile. We are the same.

[Anonymous]

If you have a college degree, live with are partner, and are retirement age 65+

1M - 40%
2M - 55%
3M - 70%
4M - 75%

6M - 80%
10M - 90%
20M - 95%

People that got/stayed married and have college degrees are doing pretty well. Change one of those and the numbers plummet, change both and you see where the retirement crisis comes from.

[Anonymous]

Anonymous wrote:If you have a college degree, live with are partner, and are retirement age 65+

1M - 40%
2M - 55%
3M - 70%
4M - 75%

6M - 80%
10M - 90%
20M - 95%

People that got/stayed married and have college degrees are doing pretty well. Change one of those and the numbers plummet, change both and you see where the retirement crisis comes from.

These numbers don't correspond with the WaPo article calculator.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have a college degree, live with are partner, and are retirement age 65+

1M - 40%
2M - 55%
3M - 70%
4M - 75%

6M - 80%
10M - 90%
20M - 95%

People that got/stayed married and have college degrees are doing pretty well. Change one of those and the numbers plummet, change both and you see where the retirement crisis comes from.

These numbers don't correspond with the WaPo article calculator.

They are directly from the calculator, scroll down and enter the variables.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

Most of this stuff is useless crap for actual rich people, not wannabe rich doctors. I would absolutely be annoyed if my parent pissed their money away on junk like this.

So you paid for your own college?

[Anonymous]

Anonymous wrote:The Washington Post has a calculator for net worth and HHI that just came out:

https://www.washingtonpost.com/business/interactive/2024/are-you-rich-american-wealth-net-worth/?itid=hp_most-read_p009_f001_1

What I find interesting is how incredibly detached from reality this forum is. There are tons of people here who claim a net worth of, say, $2M at 40 is basically next to loserville and you should immediately jump off a skyscraper and hide your shame. Some say you need $20M at 65 to retire comfortable in today's age. This points out how incredibly idiotic and detached from reality those views are when they reflect the views of the top 97% to 99% of already the wealthiest country on planet earth. Basically, the people on this forum are living on a really rarified bubble.

Emphasis on "claim". Everyone on the internet is a billionaire supermodel

[Anonymous]

Anonymous wrote:If you have a college degree, live with are partner, and are retirement age 65+

1M - 40%
2M - 55%
3M - 70%
4M - 75%

6M - 80%
10M - 90%
20M - 95%

People that got/stayed married and have college degrees are doing pretty well. Change one of those and the numbers plummet, change both and you see where the retirement crisis comes from.

Are they counting net worth as double (household) for partnered people?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

Not if you also account for the planned expense. Unlike a house, a 529 is available to tap into quickly (penalty of course) and the kid could go to community college.

Our net worth model shows all financial assets and known/anticipated expenses until we get to 100. These include car replacement every 10 years, home improvements every 10 years (not the same year as car), anticipated private college costs, etc. If we didn't do that, we'd have to know how much the 529 will not cover and plan for that. Far easier to just include the full 529 in assets and full, expected college costs as outflows at the appropriate dates (we assume costs are about 80K/year now and that they increase by 5% per year).

We don't include home equity because it's not liquid, we need a roof over our heads and by the time we do sell the house, pay realtors, find a new place to live, etc. I'm not sure we'd be better off than otherwise. Just easier to ignore it. Our HE is also not that high (about $5-600K).

Stocks could crash.
Banks could fail.
Government could collapse.

You should model the risk adjusted value of your assets.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

All money is spent. Do you reduce your 401k by expected taxes?

Also, the balance you’ve accumulated is the difference between someone that invests on a regular, disciplined basis…and somebody who keeps that same extra money in a savings account, keeps it in their checking account and fritters it away on odds and ends, etc. There are a lot of people in the latter category. I think this forum tends to attract people in the former. The time value of money punishes people.

You absolutely should!
Yoy cat pay your rent with your tax payments.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

All money is spent. Do you reduce your 401k by expected taxes?

Also, the balance you’ve accumulated is the difference between someone that invests on a regular, disciplined basis…and somebody who keeps that same extra money in a savings account, keeps it in their checking account and fritters it away on odds and ends, etc. There are a lot of people in the latter category. I think this forum tends to attract people in the former. The time value of money punishes people.

You absolutely should!
Yoy cat pay your rent with your tax payments.

But I guarantee that almost everybody complaining that a 529 shouldn't be included in net worth isn't reducing their portfolio by projected tax liability.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you have a college degree, live with are partner, and are retirement age 65+

1M - 40%
2M - 55%
3M - 70%
4M - 75%

6M - 80%
10M - 90%
20M - 95%

People that got/stayed married and have college degrees are doing pretty well. Change one of those and the numbers plummet, change both and you see where the retirement crisis comes from.

Are they counting net worth as double (household) for partnered people?

Yes, obviously. Which is correct. The only people who think net worth should be quantified at the individual, even if they are married, are single and/or divorced people. For the rest of us, a married couple is a single financial unit for purposes of calculating net worth.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

But it’s not spent. It’s in an investment account. The kids may not go to college, or choose a state school or a military academy, etc. We have savings for future cars and home improvements too but until we buy those things, that money is part of our net worth.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It’s behind a paywall for me but this forum makes me feel poor. It’s hard to be excited about my 401(k) hitting $1 million when reading about people worrying about retiring with accounts worth $6 million+.

I do feel like people on here exaggerate though because some of the people I know in real life who act the richest also have enormous 1st and 2nd mortgages and HELOCs, etc. so it’s a facade.

This is a really interesting point. The one guy I know who drives the most expensive car and lives on the most expensive house and has the biggest beach house also has huge mortgages and is constantly moving money around HELOCs and personal loans to address cash flow throughout the year.

It's actually really common for high-compensation individuals to retire with nothing significant saved. Divorces, expensive cars/toys/vacations, home improvements, etc. adds up. Eventually, they just run out of time and there's no more "next year". I've heard that story many times first/second/thirdhand at our firm.

My mom was a physician and retired with about $1 million. We have no idea where 40 years of high income went. She pissed it all away somehow.

She probably spent it on her kids. That's where my high income goes. Expensive sleep away camp, private schools, travel sports, nice vacation, wonderful birthdays - I hope they don't sound as ungrateful as you when I'm old and have little for them to inherit.

I am her kid. She paid for our tuition in the 80s and early 90s when it wasn’t that expensive (we went to in-state publics). So there was at least 20 years when she wasn’t paying for that. And she lived in a low cost of living area. I know she had a lot of people doing stuff for her - housekeeper coming twice a week, landscapers weekly - but it still seems like she didn’t play good financial defense.

DP here. Was your mom by any chance raised lower middle class? I've seen a lot of people who were raised LC/LMC who make it into UMC and overspend. Their salary sounds so high and they just don't do the math. Yay we earn $300K so we'll do cleaners, eat out or get take out a lot, send the kid to private school, pay professionals for every little home repair, etc.

We make $300k, have cleaners, eat a lot of take out, one kid in private, have to outsource all home repair...and we still have over $3 mil net worth (two-thirds is retirement, then home equity, college savings, etc). It is a lot of money to me and I'm grateful we can have these things.

I would not count college savings in net worth. That is money already spent.

Not if you also account for the planned expense. Unlike a house, a 529 is available to tap into quickly (penalty of course) and the kid could go to community college.

Our net worth model shows all financial assets and known/anticipated expenses until we get to 100. These include car replacement every 10 years, home improvements every 10 years (not the same year as car), anticipated private college costs, etc. If we didn't do that, we'd have to know how much the 529 will not cover and plan for that. Far easier to just include the full 529 in assets and full, expected college costs as outflows at the appropriate dates (we assume costs are about 80K/year now and that they increase by 5% per year).

We don't include home equity because it's not liquid, we need a roof over our heads and by the time we do sell the house, pay realtors, find a new place to live, etc. I'm not sure we'd be better off than otherwise. Just easier to ignore it. Our HE is also not that high (about $5-600K).

Stocks could crash.
Banks could fail.
Government could collapse.

You should model the risk adjusted value of your assets.

PP you are responding to.. All that is true. I do adjust my model to reflect a drawdown that the market never recovers from. E.g. If my net worth on Jan 1 is $5M and I expect a 5% growth, that would be % 5,250,000 at the end of the year. I reduce this by a "reduction factor" (e.g. 10%) so the beginning value in my model for next year would be $4,200,000. The model also assumes we never recover from this. i.e. a reset.

After the 2022 dip, I used a 20% Reduction Factor because the market was already down 20+%. I just upped it to 50% given the 2023 run-up and I'm still good. So, yeah, I do factor in a lot of risk. I also think my 5% growth rate is very conservative and by itself offsets some of the risk associated with dying broke, which, at the end of the day is the real risk we all need to mitigate.