What is your % of Net Worth by Category?

[The J]

Feb 23, 2011 11:26:32 GMT -5 dancinmama said:

Okay, I'll play. We are 54 and 53. DH plans to retire in 2012.

For those that included their pensions in retirement savings, how did you calculate its value? DH will receive a pension based on 31 years of service with his company, but I have never included it when calculating net worth.

I never include cars or other personal property in our net worth calculations either. Even if I did, it wouldn't amount to much because we buy our cars used and drive them until they die. My car is 11 years old and DH's is 7 years old.

Retirement Savings (401K, IRA): 64%
Taxable Savings: 11%
Investment Property: 7%
Home Equity: 18% (a drastic reduction over the last few years)
Other Property: 0%

I'd use an immediate annuity calculator -- put in his retirement age and the monthly benefit, and see what one would cost to purchase.

[Gardening Grandma]

Feb 23, 2011 11:32:21 GMT -5 The J said:

Feb 23, 2011 11:26:32 GMT -5 dancinmama said:

Okay, I'll play. We are 54 and 53. DH plans to retire in 2012.

For those that included their pensions in retirement savings, how did you calculate its value? DH will receive a pension based on 31 years of service with his company, but I have never included it when calculating net worth.

I never include cars or other personal property in our net worth calculations either. Even if I did, it wouldn't amount to much because we buy our cars used and drive them until they die. My car is 11 years old and DH's is 7 years old.

Retirement Savings (401K, IRA): 64%
Taxable Savings: 11%
Investment Property: 7%
Home Equity: 18% (a drastic reduction over the last few years)
Other Property: 0%

I'd use an immediate annuity calculator -- put in his retirement age and the monthly benefit, and see what one would cost to purchase.

I've puzzled about this as well. I don't currently include the value of our pensions in our NW. If I'm going to do that, would it be part of retirement savings? Or just as its own category?

[resolution]

Is there a particular calculator that you use? The ones I found were for annuties that would start paying out right away, so obviously they returned a higher value than one that would start paying out 20 years from now.

[Gardening Grandma]

Feb 21, 2011 9:37:46 GMT -5 Gardening Grandma said:

Retirement accounts 45%
Home equity 25%
Taxable investment account 7%
Rental real estate 23%
Ages 62 and 66

The above does not factor in the value of our pensions. I used an annuity calculator to figure that and it changes the picture dramatically:
Retirement (IRAs and pensions): 62%
Home equity: 17%
Taxable investment account: 5%
Rental RE: 16%
Cash on hand: less than 1%

[Firebird]

Retirement: 43%
Home Equity: 0%
Taxable Savings: 28%
Other Property: 29%

Age: 25 (tomorrow ;D)

I never really count my car, though. I don't see the point of including a depreciating asset in one's net worth, especially one I plan to keep. It's never going to make me any money.

I'm not planning to buy a house anytime soon, but I will probably start saving for it in 2012.

[The J]

I've puzzled about this as well. I don't currently include the value of our pensions in our NW. If I'm going to do that, would it be part of retirement savings? Or just as its own category?

I count it as an annuity, so a separate line.

Is there a particular calculator that you use? The ones I found were for annuties that would start paying out right away, so obviously they returned a higher value than one that would start paying out 20 years from now.

I use the one at immediateannuities.com. I just input anticipated retirement age as the "current" age.

[wodehouse]

yay! I just increased my net worth by about $80K using the immediate annuity concept.

[dancinmama]

Feb 23, 2011 11:32:21 GMT -5 The J said:

Feb 23, 2011 11:26:32 GMT -5 dancinmama said:

Okay, I'll play. We are 54 and 53. DH plans to retire in 2012.

For those that included their pensions in retirement savings, how did you calculate its value? DH will receive a pension based on 31 years of service with his company, but I have never included it when calculating net worth.

I never include cars or other personal property in our net worth calculations either. Even if I did, it wouldn't amount to much because we buy our cars used and drive them until they die. My car is 11 years old and DH's is 7 years old.

Retirement Savings (401K, IRA): 64%
Taxable Savings: 11%
Investment Property: 7%
Home Equity: 18% (a drastic reduction over the last few years)
Other Property: 0%

I'd use an immediate annuity calculator -- put in his retirement age and the monthly benefit, and see what one would cost to purchase.

Based on what you recommend, couldn't I just take the annual payments WE will receive and multiply it by my life expectancy? I will continue to receive the same amount if he should die before me.

[TrixAre4Kids]

Feb 23, 2011 13:05:27 GMT -5 The J said:

I've puzzled about this as well. I don't currently include the value of our pensions in our NW. If I'm going to do that, would it be part of retirement savings? Or just as its own category?

I count it as an annuity, so a separate line.

Is there a particular calculator that you use? The ones I found were for annuties that would start paying out right away, so obviously they returned a higher value than one that would start paying out 20 years from now.

I use the one at immediateannuities.com. I just input anticipated retirement age as the "current" age.

Thanks J, cool calculator. I will get a pension when I retire, and can choose to take it lump sum or as an annuity. I never include it as part of my networth although I know I should.

The annuity (if I retired tomorrow) would cost appx 172K more to purchase than the lump sum I would receive. Anybody else in this boat? How are you electing to take your pension?

[dancinmama]

Okay, here are my new figures based on the annuity calculator and its estimated cost to purchase an annuity that will provide the same monthly income that we will be receiving in pension.

Retirement Savings (401K, IRA): 42%
Annuity: 35%
Taxable Savings: 7%
Investment Property: 5%
Home Equity: 11%
Other Property: 0%

[TrixAre4Kids]

Retirement Savings (401K, IRA/Roth IRA): 38%
Annuity: 35%
Taxable Savings: 1%
Rental Property: 10%
Home Equity: 15%
Other Property: 1%

Age 55

[Tred]

Retirement: 54%
House: 0%
Cash: 46%
Other: 0%

Age 30

I don't include my 2 cars. I won't ever sell them for the sake of getting money out of them. I'll either drive them into the ground, or get rid of them when I don't want/need them any more.

Cash is higher than I'd like it to be, because I'd like to buy a residence sometime in the foreseeable future...though I've been saying that for a while...

[TrixAre4Kids]

Karma to you Tredmil, thanks for posting!

And this is a great time to be buying a home if you're serious.

[skweet]

Cash - 0.29%
Retirement - 1.21%
Personal Real Estate - 14.60%
Rental Real Estate - 10.70%
Investment Real Estate - 26.10%
Small Business Equity - 47.10%
33 years old

[Tred]

Thanks for the karma, trixare4kids!

Looking at trying to buy a home has been a discouraging process. I've always lived in modest dwellings in desirable areas (rather than living in a great house out in the sticks). This hasn't presented too much of a problem while renting, but since I live in a HCOLA the purchasing prospects are a bit more of a challenge.

Oh well. I'll just keep working, keep saving....keep hoping for some flash of inspiration...

[The J]

Based on what you recommend, couldn't I just take the annual payments WE will receive and multiply it by my life expectancy? I will continue to receive the same amount if he should die before me.

You theoretically could, if you then applied the appropriate discount rate. I find it easier to just use the cost of the annuity as a value basis, because that would effectively be the cost to replace your pension.

[mesquite77]

skweet - is your "investment RE" commercial property? Do you view these RE holdings as different asset classes for residential vs. commerical?I'

Just wondering - I lump our personal residence equity with our residential rental property into "RE holdings", wondering what your thoughts are.

[skweet]

Feb 24, 2011 19:53:02 GMT -5 mesquite77 said:

skweet - is your "investment RE" commercial property? Do you view these RE holdings as different asset classes for residential vs. commerical?I'

Just wondering - I lump our personal residence equity with our residential rental property into "RE holdings", wondering what your thoughts are.

My investment real estate is ag land, bare land, subdivisions, commercial non-income real estate available for sale, or development. The equity in these properties is held as partnership interests for the most part, so I have a little invested in several types of property. I separated (for the purposes of this excercise) commercial income property not to be sold, from inventory that has or will be sold. (The has been sold portion is contract sales that may, or may not, fully pay-out.) As far as your way of lumping vs. my way of lumping, I don't have any thoughts. As long as you know what you have and can manage it well, then it is the correct way.

[achelois]

Home 12%
taxable accts 37%
retirement accts 51%


ETA: pension not included in this

[alabamagal]

Retirement Funds 30% - includes annuity calculations for pensions
Personal Business - 64%
Cash 1%
Real Estate 5%

Ages 48 and 49

We are heavily invested in our "small" business. The value is based on our current business valuation. Business is good now, and hopefully will stay that way. The business value really skews the other numbers down, but this is high risk. If business goes to 0$, we are still ok, but not great. That is why we put a lot of our efforts into keeping the business going strong. Even though the real estate is low, we do have pretty good equity in our house and have significant retirement income (mainly through pensions)

[schildi]

Feb 23, 2011 13:39:16 GMT -5 dancinmama said:

Feb 23, 2011 11:32:21 GMT -5 The J said:

I'd use an immediate annuity calculator -- put in his retirement age and the monthly benefit, and see what one would cost to purchase.

Based on what you recommend, couldn't I just take the annual payments WE will receive and multiply it by my life expectancy? I will continue to receive the same amount if he should die before me.

That would result in a larger sum than what it really is worth at the moment. The time value of money ....

[Deleted]

Some interesting results so far. I took everyone's numbers and dumped them in excel.

With a couple dozen submissions, here's what the averages look like (I had to take some liberties putting them in the 4 original categories):

Retirement: 51%
Primary Home Equity: 14%
Taxable Savings: 23%
Other Property: 11%

Average Age of respondent: 38


Other Property is largely Rental/Investment Property. Not surprising that Retirement accounts lead the way...about 75% of respondents had this as their largest account. Just under 15% had their largest holdings in Taxable Accounts, and just a couple people with Home Equity or Other Property as their top category.

If enough people respond, I'll try and break it out by age groups, but not really enough data points for anything meaningful yet.

[Deleted]

Question about the pension:
-> do you put the estimated value in your net worth?
-> What guarantees that amount? I mean if I stay working with my company the amount is about 1k or so per month... but if I were to stop working today it would be about $22.88
-> with my pension, I think my wife gets zilch if I were to pass away before her

[dancinmama]

Feb 26, 2011 10:22:41 GMT -5 TheHaitian said:

Question about the pension:
-> do you put the estimated value in your net worth?
-> What guarantees that amount? I mean if I stay working with my company the amount is about 1k or so per month... but if I were to stop working today it would be about $22.88
-> with my pension, I think my wife gets zilch if I were to pass away before her

If you follow what the J suggested in an earlier post, you can go to www.immediateannuity.com. You plug in the state that you live in, the age at which you will retire, and the monthly amount that you will get in a pension. You said that you plan to retire at age 65 in one post and that you'll receive about $1000 in this post. I plugged in CA (my state), Male, 65, and $1000 a month and the value of your pension (if all the data you gave is correct) was $161,402.

HTH

[Deleted]

Feb 26, 2011 23:27:04 GMT -5 dancinmama said:

Feb 26, 2011 10:22:41 GMT -5 TheHaitian said:

Question about the pension:
-> do you put the estimated value in your net worth?
-> What guarantees that amount? I mean if I stay working with my company the amount is about 1k or so per month... but if I were to stop working today it would be about $22.88
-> with my pension, I think my wife gets zilch if I were to pass away before her

If you follow what the J suggested in an earlier post, you can go to www.immediateannuity.com. You plug in the state that you live in, the age at which you will retire, and the monthly amount that you will get in a pension. You said that you plan to retire at age 65 in one post and that you'll receive about $1000 in this post. I plugged in CA (my state), Male, 65, and $1000 a month and the value of your pension (if all the data you gave is correct) was $161,402.

HTH

Thank you dancinmama... So that would mean that every year when I get a statement I would need to change the amount ... Been with the company 2 years and as time passes by and my salary incresses so will my expected pension amount.

Thank you again

[dancinmama]

Feb 27, 2011 0:43:44 GMT -5 TheHaitian said:

Feb 26, 2011 23:27:04 GMT -5 dancinmama said:

If you follow what the J suggested in an earlier post, you can go to www.immediateannuity.com. You plug in the state that you live in, the age at which you will retire, and the monthly amount that you will get in a pension. You said that you plan to retire at age 65 in one post and that you'll receive about $1000 in this post. I plugged in CA (my state), Male, 65, and $1000 a month and the value of your pension (if all the data you gave is correct) was $161,402.

HTH

Thank you dancinmama... So that would mean that every year when I get a statement I would need to change the amount ... Been with the company 2 years and as time passes by and my salary incresses so will my expected pension amount.

Thank you again

Yep, that's what you'd need to do....and, you're welcome.