Anonymous
Post 05/06/2024 12:10     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:How do you calculate a pension for total retirement assets?


There are several ways and it depends on the type of pension. This is a good, if dense, explanation: https://andrewmarshallfinancial.com/what-is-a-pension-worth/

It gets easier to value a pension as you get closer to age of retirement to earn the full pension. I am 5 years out now, so I have a good idea of what my initial pension payment will be (mine is 60% of the average of the top three years of earnings, so I can extrapolate fairly easily based on current salary). My pension is inflation adjusted as well, so I follow the calculations at the link for inflation adjusted pensions.


I do not think it makes sense to add pensions to net worth calculations. The income stream disappears when you die and usually cannot be cashed out for upfront if you are short on funds. You can use the pension to reduce the amount assets needed for your desired retirement lifestyle, but this “asset” cannot be passed on to heirs so it shouldn’t be included as part of net worth.


My pension plan allows designation of a non-spouse survivor who can receive benefits.
Anonymous
Post 05/06/2024 12:06     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?


Not really. I am at about 95th percentile. Don't need to be top 1 percent.
Anonymous
Post 05/06/2024 12:01     Subject: Top 1% of Retirees Have 16.7M
120k salary is 90th percentile. Makes sense they end up with a 90th percentile retirement as someone making 120k and maxing retirement and owning their own house with no mortgage should have about 2M in assets by late 60s.

A lot of inflation. You're thinking in 1990s numbers when it's 2024.

Anonymous
Post 05/06/2024 11:59     Subject: Re:Top 1% of Retirees Have 16.7M
Anonymous wrote:Does "wealth" include equity in your primary home?


In the study cited it does.
Anonymous
Post 05/06/2024 11:51     Subject: Re:Top 1% of Retirees Have 16.7M
Does "wealth" include equity in your primary home?
Anonymous
Post 05/06/2024 11:43     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:3.2M is not even close to wealthy.That is only 128k in annual income before taxes. That is not even the 75th percentile for household income. That is a solidly middle class income and it will provide you an acceptable retirement, but not a life of luxury.


This is a weird analysis. A solidly middle class income from *not working* is not the same thing as being middle class. Middle class is when you work for $128k before taxes. $128k before taxes from investment returns, with $3.2M still in the bank, is a different kettle of fish.
Anonymous
Post 05/06/2024 11:41     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:
Anonymous wrote:How do you calculate a pension for total retirement assets?


There are several ways and it depends on the type of pension. This is a good, if dense, explanation: https://andrewmarshallfinancial.com/what-is-a-pension-worth/

It gets easier to value a pension as you get closer to age of retirement to earn the full pension. I am 5 years out now, so I have a good idea of what my initial pension payment will be (mine is 60% of the average of the top three years of earnings, so I can extrapolate fairly easily based on current salary). My pension is inflation adjusted as well, so I follow the calculations at the link for inflation adjusted pensions.


I do not think it makes sense to add pensions to net worth calculations. The income stream disappears when you die and usually cannot be cashed out for upfront if you are short on funds. You can use the pension to reduce the amount assets needed for your desired retirement lifestyle, but this “asset” cannot be passed on to heirs so it shouldn’t be included as part of net worth.
Anonymous
Post 05/06/2024 11:37     Subject: Top 1% of Retirees Have 16.7M
3.2M is not even close to wealthy.That is only 128k in annual income before taxes. That is not even the 75th percentile for household income. That is a solidly middle class income and it will provide you an acceptable retirement, but not a life of luxury.
Anonymous
Post 05/06/2024 11:33     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Why would it? We all know the baby boomers were pretty bad at saving. Most of how they did it was by lucking in to homes that increased in value exponentially. My parents in law (retired boomers) are not who I want to emulate in terms of savings. They still have to count every penny in retirement.

I don't want that.


I thought the evil boomers were all sitting on piles of cash that they refuse to give their children?


My in-laws are rich and still act as though they could be homeless tomorrow.


It’s good to think that way if you want your money to last a very long time. Better than spending without thinking about tomorrow.
Anonymous
Post 05/06/2024 11:31     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:
Anonymous wrote:Why would it? We all know the baby boomers were pretty bad at saving. Most of how they did it was by lucking in to homes that increased in value exponentially. My parents in law (retired boomers) are not who I want to emulate in terms of savings. They still have to count every penny in retirement.

I don't want that.


I thought the evil boomers were all sitting on piles of cash that they refuse to give their children?


Massive increase in value of property and stock market run ups. Also generationally routinely vote for tax cuts that benefit them and kick the can to their children and grandchildren. They’re not, as a generation particularly good voluntary savers.
Anonymous
Post 05/06/2024 11:31     Subject: Top 1% of Retirees Have 16.7M
No because most retirees don't live around here. They live in small towns in LCOL areas.
Anonymous
Post 05/06/2024 11:30     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?


This is eye opening because my spouse and I are in the 95th percentile based on pension plus value of home, even though I consider us "behind" on 401k savings. I don't think it changes our calculus in terms of when we retire or how we are going about it, but it is reassuring to know we aren't as far behind as I thought.
Anonymous
Post 05/06/2024 11:28     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Why would it? We all know the baby boomers were pretty bad at saving. Most of how they did it was by lucking in to homes that increased in value exponentially. My parents in law (retired boomers) are not who I want to emulate in terms of savings. They still have to count every penny in retirement.

I don't want that.


I thought the evil boomers were all sitting on piles of cash that they refuse to give their children?


My in-laws are rich and still act as though they could be homeless tomorrow.


Well, that is a good point. Who knows how much people actually have. But I don't think my in laws are crying poor, though a lot of people do.
Anonymous
Post 05/06/2024 11:28     Subject: Top 1% of Retirees Have 16.7M
Anonymous wrote:How do you calculate a pension for total retirement assets?


There are several ways and it depends on the type of pension. This is a good, if dense, explanation: https://andrewmarshallfinancial.com/what-is-a-pension-worth/

It gets easier to value a pension as you get closer to age of retirement to earn the full pension. I am 5 years out now, so I have a good idea of what my initial pension payment will be (mine is 60% of the average of the top three years of earnings, so I can extrapolate fairly easily based on current salary). My pension is inflation adjusted as well, so I follow the calculations at the link for inflation adjusted pensions.
Anonymous
Post 05/06/2024 11:12     Subject: Re:Top 1% of Retirees Have 16.7M
Anonymous wrote:So I'll be in the 90th percentile. Fine with me.


+1 I never expected to be in the 99th percentile.