Do you feel financially secure?

[Anonymous]

Anonymous wrote:We have 2M and I don't feel secure. I'm not pathological but like OP I realize everything is a house of cards. Most is tied in house/investments. Take out house/ college savings we have 1.2M which is only 50k per year at 4 percent withdrawal rate... If the stock market declines by 50 percent that's 25k per year. We have no pensions and social security will be broke by the time we retire. We are 45.

. But you are only 45. Plenty of time to save more than enough. ?

[Anonymous]

Anonymous wrote:Seems no matter what financial milestone I hit (recently got to $1M in net worth minus primary residence) it all feels like a house of cards. Stock market, real estate, and job all feel too volatile.

Well, yes, you are taxed highly at your earnings, and it is likely that there will b no social security for your generation when you retire. So of course you feel this way.

[Anonymous]

Expenses vs. income matter, too. I'm the PP above who lost almost half her net worth between '05 and '08. Part of the reason we feel insecure is that our income and expenses match up almost exactly. We NEED both incomes. Our only "luxury" expense is private school for the kids, but our school district sucks. We only make $150K combined. We just really aggressively fund the 401K. So we have a lot of money tied up in accounts we can't access without a major penalty. It's nice to know it's there for an absolute crisis, but there's no guarantee it will still be there when we need it, and in the meantime, looking at our bank account balance on a Thursday, before one of us gets our next paycheck (we get paid alternate weeks, which is nice) is panic-inducing.

[Anonymous]

The idea that there will not be social security in 20, 30 or 40 years is a myth spread by right wing nutjobs trying to undermine support for social security. Worst case scenario, which is highly unlikely, social security will still be paying 75-80% of projected benefits.

I guess I don't stay up at night worrying about the possibility that I will have to live off my investments and that the stock market will decline 50%. Could those things happen? Sure-- likewise I could have an aneurysm or be hit by car tomorrow.

I try to be conscious of my current good fortune, but I think there's a difference between that and being overwhelmed by the possibility of catastrophes occurring.

[Anonymous]

Anonymous wrote:Wow. I can't believe that someone with a $1m net worth would feel financially insecure. My/our net worth is a negative number (still paying off student loans), I'm 37, and I sleep fine at night. Just freaking relax. Life is not all about money.

It's not all about money, but how do you plan to take care of yourself once you retire or can't work anymore?

[Anonymous]

Anonymous wrote:The idea that there will not be social security in 20, 30 or 40 years is a myth spread by right wing nutjobs trying to undermine support for social security. Worst case scenario, which is highly unlikely, social security will still be paying 75-80% of projected benefits.

I guess I don't stay up at night worrying about the possibility that I will have to live off my investments and that the stock market will decline 50%. Could those things happen? Sure-- likewise I could have an aneurysm or be hit by car tomorrow.

I try to be conscious of my current good fortune, but I think there's a difference between that and being overwhelmed by the possibility of catastrophes occurring.

Call me in 30 years when they have cut off (for the wealthy) or curtailed (for everyone else) our social security benefits, brother or sister, and then perhaps we can commiserate over that 75-cent cup of coffee that still exists from 30 years ago. The more things change . . .

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems no matter what financial milestone I hit (recently got to $1M in net worth minus primary residence) it all feels like a house of cards. Stock market, real estate, and job all feel too volatile.

Just curious if you're willing to share...how old are you and is your $1M less primary residence yours alone or is it a combined number with what your spouse has also saved?

OP here: I am 40 with one child. Widowed three years ago - half the net worth is due to life insurance. It was not really adequate to replace my husband's earning power but I am very grateful to have it. I suppose some people have nailed it - this is an anxiety issue. I already know that the worst can happen, because it did. Now I am the sole provider for a small child and have college, mortgage, and retirement on my shoulders alone. If I lose my job and can't replace it at the same level, or if we have a major medical emergency, or if the stock market tanks, the whole house of cards could fall down very quickly.

OP--I'm sorry for your loss. It makes sense that you worry. You're right, the worst has happened and you have survived. But I'm sure that the lessons you learned has stuck with with. Those first few months without your husband must have been very scary. The best you can do is do your best. Budget and save. Remember that your retirement is more important than your child's college fund. I know that's hard to hear, but your child can get loans if need be...no one is going to give you a loan for retirement.

Do you have a fall back job just in case you lose your job? For example, I'm an accountant by education and certification. But I don't practice. I left Big 10 and never looked back. I still have my CPA license though and I maintain it. If I ever lose my job, I can always go back to Big 10. Not at my current income, but probably at a Sr. Auditor level. It would require changes to my lifestyle but I wouldn't be income less. I also have a Phd in accounting. Recently I picked up 2 classes to teach in the evenings online. Again, it won't pay all the bills but it does bring in additional money that I could use for say...food. My point is, it's hard when all your eggs are in one basket and you have no one else to turn to for support---either financially or emotionally.

Ignore the crazy people on here who say you are worrying too much. You're not. You're looking out for the interests of you and your child because there is no one else to. It might be wise to talk to a financial planner about investing the life insurance.

Good luck.

[Anonymous]

Anonymous wrote:We have 2M and I don't feel secure. I'm not pathological but like OP I realize everything is a house of cards. Most is tied in house/investments. Take out house/ college savings we have 1.2M which is only 50k per year at 4 percent withdrawal rate... If the stock market declines by 50 percent that's 25k per year. We have no pensions and social security will be broke by the time we retire. We are 45.

Well, if it helps, that $1.2M at 6% will be $3.8M when you hit 65. Assume you take out $150,000 a year. Offset by a 2% return, your net annual withdrawls are then 77K a year. That would last you another 37 years, at which point you'd be 102 years old, or more likely, dead.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Wow. I can't believe that someone with a $1m net worth would feel financially insecure. My/our net worth is a negative number (still paying off student loans), I'm 37, and I sleep fine at night. Just freaking relax. Life is not all about money.

It's not all about money, but how do you plan to take care of yourself once you retire or can't work anymore?

We are only 37 -- that gives us 30ish more years of working to pay off our debts, continue to add to the equity in our property, and bank money for retirement. But, I have four children, and I expect that if the shit hit the fan, they will be there for us, as we have been/will be there for our parents. I also believe that if I live long enough, I will draw Social Security. I don't understand the whole "Social Security won't be around in 30 years" meme. There is just no reason to believe that will happen. We also both have substantial life insurance policies and may end up inheriting some money (not a lot, but every bit helps) when our parents pass away. So the plan is to have a paid off property by the time we retire and to have enough retirement savings + Social Security to have a reasonable standard of living.

Having read the OP's response, I will say that if I was widowed I would worry a lot more about money and the future. In her situation, it makes more sense that she feels this way.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have 2M and I don't feel secure. I'm not pathological but like OP I realize everything is a house of cards. Most is tied in house/investments. Take out house/ college savings we have 1.2M which is only 50k per year at 4 percent withdrawal rate... If the stock market declines by 50 percent that's 25k per year. We have no pensions and social security will be broke by the time we retire. We are 45.

Well, if it helps, that $1.2M at 6% will be $3.8M when you hit 65. Assume you take out $150,000 a year. Offset by a 2% return, your net annual withdrawls are then 77K a year. That would last you another 37 years, at which point you'd be 102 years old, or more likely, dead.

Yes but inflation may take a big bite. Leading senators talk about means testing social security and I really don't think it will be available to me. I know I am doing well but my definition of being financially secure is not having" to work again. Like a PP mentioned, I lost half of my savings in 2008. I went from 600k to 300k. Realistically, I feel if I save for retirement at my current level for the next four years don't retire until 60 and don't have a job loss/ health issue I will be fine. But 1.2M is not enough that I can say screw work and retire.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Wow. I can't believe that someone with a $1m net worth would feel financially insecure. My/our net worth is a negative number (still paying off student loans), I'm 37, and I sleep fine at night. Just freaking relax. Life is not all about money.

It's not all about money, but how do you plan to take care of yourself once you retire or can't work anymore?

We are only 37 -- that gives us 30ish more years of working to pay off our debts, continue to add to the equity in our property, and bank money for retirement. But, I have four children, and I expect that if the shit hit the fan, they will be there for us, as we have been/will be there for our parents. I also believe that if I live long enough, I will draw Social Security. I don't understand the whole "Social Security won't be around in 30 years" meme. There is just no reason to believe that will happen. We also both have substantial life insurance policies and may end up inheriting some money (not a lot, but every bit helps) when our parents pass away. So the plan is to have a paid off property by the time we retire and to have enough retirement savings + Social Security to have a reasonable standard of living.

Having read the OP's response, I will say that if I was widowed I would worry a lot more about money and the future. In her situation, it makes more sense that she feels this way.

Sounds like you might be one of the lucky/unlucky ones who will be "means" tested out of social security when you retire in 30 years, despite all that you have paid into the system. In a country with limited resources, enormous debt obligations, a decreasing tax base, and an ever-increasing population of truly poor retirees it is almost a certainty that not everyone will get to collect social security.

[Anonymous]

OP, sorry for your loss. Financially you have a good cushion though, try to feel good about that.

I don't feel financially secure. When I think about what it would take to truly relax, to feel as though I could sail through any catastrophe, it's about $5M. I am no where close to having that at 35 and doubt I will have it when I retire. So I'm never going to feel 100% comfortable. All I can do is live below my means and save consistently.

[Anonymous]

Anonymous wrote:OP, sorry for your loss. Financially you have a good cushion though, try to feel good about that.

I don't feel financially secure. When I think about what it would take to truly relax, to feel as though I could sail through any catastrophe, it's about $5M. I am no where close to having that at 35 and doubt I will have it when I retire. So I'm never going to feel 100% comfortable. All I can do is live below my means and save consistently.

How did you come up with that number?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have 2M and I don't feel secure. I'm not pathological but like OP I realize everything is a house of cards. Most is tied in house/investments. Take out house/ college savings we have 1.2M which is only 50k per year at 4 percent withdrawal rate... If the stock market declines by 50 percent that's 25k per year. We have no pensions and social security will be broke by the time we retire. We are 45.

Well, if it helps, that $1.2M at 6% will be $3.8M when you hit 65. Assume you take out $150,000 a year. Offset by a 2% return, your net annual withdrawls are then 77K a year. That would last you another 37 years, at which point you'd be 102 years old, or more likely, dead.

Yes but inflation may take a big bite. Leading senators talk about means testing social security and I really don't think it will be available to me. I know I am doing well but my definition of being financially secure is not having" to work again. Like a PP mentioned, I lost half of my savings in 2008. I went from 600k to 300k. Realistically, I feel if I save for retirement at my current level for the next four years don't retire until 60 and don't have a job loss/ health issue I will be fine. But 1.2M is not enough that I can say screw work and retire.

It seems to me that you should have learned a very important lesson: Certainty about the future is NOT possible.

Even if you save a lot of money, it's still possible to lose it. Things could still happen to derail all of your plans.

And everything could go well -- you could save more than enough money, stay employed, retire at 60 and then die of a heart attack when you're 61.

The best you can do is live reasonably, everything in moderation (saving and spending), such that you are enjoying your life NOW but you are still saving some money. And then the rest is sort of out of your control.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, sorry for your loss. Financially you have a good cushion though, try to feel good about that.

I don't feel financially secure. When I think about what it would take to truly relax, to feel as though I could sail through any catastrophe, it's about $5M. I am no where close to having that at 35 and doubt I will have it when I retire. So I'm never going to feel 100% comfortable. All I can do is live below my means and save consistently.

How did you come up with that number?

PP here: I used my annual spending times the amount of years I might live with no additional income whatsoever, and no expectations of principal growth (i.e., it wouldn't have to be invested). With a big cushion for the effects of inflation.