Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
User avatar
Topic Author
grogu
Posts: 60
Joined: Fri Jan 22, 2021 12:36 am

Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by grogu »

https://www.cnbc.com/2021/05/17/net-wor ... table.html

Assuming a 4% withdrawal rate, that’s only $25k per year. And that assumes none of the net worth is tied up in a house.

To be fair, if you look at the underlying results, the survey respondents gave larger numbers for the amounts needed “for financial happiness” ($1.1M) and “to be wealthy” ($1.9M). Still, $624k is what they said is needed to be “comfortable,” not “survivable.” And 45% of the respondents (women) gave an average answer of only $325k (men’s average was $864k), which is only $13k a year at 4% withdrawal rate! Maybe they surveyed a disproportionate number of people with fat pensions.
sawhorse
Posts: 3640
Joined: Sun Mar 01, 2015 7:05 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by sawhorse »

I'm not sure why you're mentioning a 4% withdrawal rate. The survey covered all age groups and wasn't about retirement. The question is so vague that I'm not sure what they were trying to measure.
PowderDay9
Posts: 390
Joined: Fri Oct 12, 2018 12:29 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by PowderDay9 »

It's CNBC and they're just reporting on a basic survey done by Schwab. I didn't find the underlying survey that interesting or helpful.
59Gibson
Posts: 377
Joined: Mon Dec 07, 2020 8:41 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by 59Gibson »

How many respondents do you think even know what the "4% rule" is/does? I think they're only looking at their answer as a large #, not necessarily what income it can produce.
User avatar
Topic Author
grogu
Posts: 60
Joined: Fri Jan 22, 2021 12:36 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by grogu »

sawhorse wrote: Tue May 18, 2021 1:04 am I'm not sure why you're mentioning a 4% withdrawal rate. The survey covered all age groups and wasn't about retirement. The question is so vague that I'm not sure what they were trying to measure.
I wouldn’t consider myself “financially comfortable” unless I didn’t need to work. And I can’t imagine investable assets (let alone a net worth) of $624k producing enough income to allow very many people to live off of “comfortably,” especially considering the survey included people who are still working.

But I do agree with those who say the respondents didn’t put much thought into their numbers. At least I hope that’s the case.
sjt
Posts: 354
Joined: Fri May 26, 2017 3:03 pm
Location: NC

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by sjt »

Check out this study on Median net worth by age - the HIGHEST median net worth is the 65-74 age group, $266k. When you consider this, $624k might seem low to you but is much higher than what most people have.

I think there's a bit of a disconnect sometimes on this forum - as it seems to attract fiscally responsible people, high earners, et al.

https://www.cnbc.com/select/average-net ... -65-to-74/
"The one who covets is the poorer man, | For he would have that which he never can; | But he who doesn't have and doesn't crave | Is rich, though you may hold him but a knave." - Wife of Bath tale
User avatar
Topic Author
grogu
Posts: 60
Joined: Fri Jan 22, 2021 12:36 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by grogu »

sjt wrote: Tue May 18, 2021 6:47 am $624k might seem low to you but is much higher than what most people have.

I think there's a bit of a disconnect sometimes on this forum - as it seems to attract fiscally responsible people, high earners, et al.
Even though a lot of people don’t have $624k, I still would’ve thought they’d want more than that in order to live comfortably. That was what I found surprising.

So the disconnect isn’t even between people’s actual state of financial affairs, but their entire thinking (or perhaps, sadly, lack thereof) about what being financially independent, or even “a lot of money” means.
Miguelito
Posts: 337
Joined: Thu Feb 27, 2014 1:21 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by Miguelito »

grogu wrote: Tue May 18, 2021 6:46 amI wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
That is a high bar.

Echoing the point that the question is far too vague, for most people, that kind of money pays of debt (including mortgage) with hundreds of thousands left over. I believe the figure. But comfortable retirement (absent a pension)? No. Much less early (or very early) comfortable retirement.
User avatar
David Jay
Posts: 10988
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by David Jay »

sjt wrote: Tue May 18, 2021 6:47 amI think there's a bit of a disconnect sometimes on this forum - as it seems to attract fiscally responsible people, high earners, et al.
And a lot of those high earners live in HCOL areas. So they perceive their "needs" differently. The $25K mentioned in the OP, coupled with a "35 year" Social Security benefit and a paid-off mortgage, could provide a comfortable life for about 80% of Americans.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
mbasherp
Posts: 615
Joined: Mon Jun 26, 2017 8:48 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by mbasherp »

Of course, it’s been mentioned that there’s nothing scientific about this survey and it was not geared towards retirement per se.

But if we do apply it in a retirement context, that $624k might represent a median priced, paid-off home in a median cost of living area, plus $300k to generate $12k per year at a 4% WR.

Add in social security and you do have a very comfortable retirement. Not rich, but comfortable.

That standard of living is pretty close to paying for our current lifestyle, as it is now. We are very comfortable.
HootingSloth
Posts: 369
Joined: Mon Jan 28, 2019 3:38 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by HootingSloth »

David Jay wrote: Tue May 18, 2021 7:27 am
sjt wrote: Tue May 18, 2021 6:47 amI think there's a bit of a disconnect sometimes on this forum - as it seems to attract fiscally responsible people, high earners, et al.
And a lot of those high earners live in HCOL areas. So they perceive their "needs" differently. The $25K mentioned in the OP, coupled with a "35 year" Social Security benefit and a paid-off mortgage, could provide a comfortable life for about 80% of Americans.
+1. A lot of people can feel quite comfortable with a paid off mortgage, Social Security, and a little bit of extra cash buffer. There's no need to have a dismissive attitude towards this perspective just because it is not well represented on Bogleheads.

In addition, a lot of young people would also feel comfortable with far less than a $600k+ net worth knowing that they still have a lot of human capital left. The survey did not say "comfortably retired" or anything like that. If you cannot even feel comfortable until you are fully financially independent, it makes for quite a slog to get there. I know we felt pretty comfortable once our student debt was paid off when our net worth was about $100k.
Global Market Portfolio + modest tilt towards volatility (80/20->60/40 as approach FI) + modest tilt away from exchange rate risk (80% global+20% U.S. stocks; currency-hedge bonds) + tax optimization
User avatar
galawdawg
Posts: 2349
Joined: Thu Dec 14, 2017 12:59 pm
Location: Georgia

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by galawdawg »

Much of how "financially comfortable" a person would be with a net worth of $624k depends upon the cost of living in the area where they live.

For example, I know quite a few retired folks in this area who have a net worth of significantly less than $624k and they very much enjoy their retirement without being reduced to eating beans and cornbread.

For example, take a couple who have a fully paid-for 3br/2ba $200k home, a fully paid-for reliable car, and combined social security of $2,500/mo. For many in that situation in a LCOL area and even a MCOL area, their social security payments alone would cover their basic monthly expenses, such as food, utilities, insurance, health care and so on. Add a portfolio of $400k and they now have extra funds for travel and other things.

So yes, it is absolutely possible for a person to be "financially comfortable" with a net worth of $624k. Will it sustain flying first class to Europe a few times a year, a brand new luxury car in the garage every three years or other similar lifestyle spending that many seem to think are "essential"? No. But a trip to the beach or the mountains for a week or so every year, driving or flying economy to visit family or friends, and a new well-appointed Camry or similar car every seven years or so? Certainly.
fortunefavored
Posts: 378
Joined: Tue Jun 02, 2015 8:18 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by fortunefavored »

Nothing in the survey refers to retirement.

I have to laugh at the incredulity that $624K in a bank account for a working american is not "financially comfortable."

Nearly every "normal" person I know or am related to would be over-the-moon happy with $624K. Almost all their financial worries would evaporate. Admittedly, $624K for most of them might as well be $5M unless they win the lottery.
alfaspider
Posts: 3684
Joined: Wed Sep 09, 2015 4:44 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by alfaspider »

fortunefavored wrote: Tue May 18, 2021 7:54 am Nothing in the survey refers to retirement.

I have to laugh at the incredulity that $624K in a bank account for a working american is not "financially comfortable."

Nearly every "normal" person I know or am related to would be over-the-moon happy with $624K. Almost all their financial worries would evaporate. Admittedly, $624K for most of them might as well be $5M unless they win the lottery.
Net worth doesn't mean $624k in the bank account. It means total of all assets, including primary residence equity. A lot of people with high six figures to low seven figures net worth have a pretty high proportion in retirement accounts that can't be touched without penalty (I know I do).
User avatar
JoMoney
Posts: 11508
Joined: Tue Jul 23, 2013 5:31 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by JoMoney »

If the person was roughly 70, with a roughly 20 year life expectancy, and had social security, sounds reasonable to me.
There's a lot of people on this board that are oblivious to what average levels of income people live on is.

If you coupled that with a pension and/or owning their primary residence, they're doing great relative to many retirees.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
User avatar
galawdawg
Posts: 2349
Joined: Thu Dec 14, 2017 12:59 pm
Location: Georgia

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by galawdawg »

Here is a link to the actual survey: https://content.schwab.com/web/retail/p ... ndings.pdf
stoptothink
Posts: 9436
Joined: Fri Dec 31, 2010 9:53 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by stoptothink »

fortunefavored wrote: Tue May 18, 2021 7:54 am Nothing in the survey refers to retirement.

I have to laugh at the incredulity that $624K in a bank account for a working american is not "financially comfortable."

Nearly every "normal" person I know or am related to would be over-the-moon happy with $624K. Almost all their financial worries would evaporate. Admittedly, $624K for most of them might as well be $5M unless they win the lottery.
I wouldn't bet on the net worth of the my entire family (on both sides) combined exceeding $624k, and that includes both our parents and 9 adult siblings. My parents have close to $0 in savings, but nearly have their home paid off. I'm pretty sure they'll be fine on SS alone whenever they decide to retire.

Like many (if not most) here, we hit 7-figures in our 30's, but let's not once again prove how disconnected Bogleheads are from the financial realities of most of the general public. A lot of people are "financially comfortable" even if their retirement doesn't include African safaris and Mediterranean cruises.
fortunefavored
Posts: 378
Joined: Tue Jun 02, 2015 8:18 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by fortunefavored »

alfaspider wrote: Tue May 18, 2021 8:02 am
fortunefavored wrote: Tue May 18, 2021 7:54 am Nothing in the survey refers to retirement.

I have to laugh at the incredulity that $624K in a bank account for a working american is not "financially comfortable."

Nearly every "normal" person I know or am related to would be over-the-moon happy with $624K. Almost all their financial worries would evaporate. Admittedly, $624K for most of them might as well be $5M unless they win the lottery.
Net worth doesn't mean $624k in the bank account. It means total of all assets, including primary residence equity. A lot of people with high six figures to low seven figures net worth have a pretty high proportion in retirement accounts that can't be touched without penalty (I know I do).
You can replace "in the bank" with "net worth" and my statement would still be correct for the population I refer to.

90% will likely go through life with negative net worth. Social security, part time work, shared housing & credit cards will be their retirement.
brian91480
Posts: 227
Joined: Fri Jan 29, 2021 7:44 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by brian91480 »

This is interesting to me because I have just a little more than this amount in cash + investments.

I also have a paid off house + a 75% paid off rental house that cash flows. I live in a medium cost of living area.

NO WAY can I retire now. My goal is 10 years. I am not financially independent... but I am comfortable. So the word "comfortable" makes sense to me. Nothing wrong with the article.
hi_there
Posts: 864
Joined: Sat Aug 29, 2020 7:00 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by hi_there »

The survey says nothing about financial independence. $624k is just the average amount of money where the respondents would consider themselves to be on a good track financially. Presumably, they would at that point, not have concerns about debt, housing, or temporary loss of work.

In case it is of interest, respondents of the survey also said that on average, they would need $1.1 million to be "financially happy", and $1.9 million to be "wealthy".
alfaspider
Posts: 3684
Joined: Wed Sep 09, 2015 4:44 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by alfaspider »

fortunefavored wrote: Tue May 18, 2021 8:20 am
alfaspider wrote: Tue May 18, 2021 8:02 am
fortunefavored wrote: Tue May 18, 2021 7:54 am Nothing in the survey refers to retirement.

I have to laugh at the incredulity that $624K in a bank account for a working american is not "financially comfortable."

Nearly every "normal" person I know or am related to would be over-the-moon happy with $624K. Almost all their financial worries would evaporate. Admittedly, $624K for most of them might as well be $5M unless they win the lottery.
Net worth doesn't mean $624k in the bank account. It means total of all assets, including primary residence equity. A lot of people with high six figures to low seven figures net worth have a pretty high proportion in retirement accounts that can't be touched without penalty (I know I do).
You can replace "in the bank" with "net worth" and my statement would still be correct for the population I refer to.

90% will likely go through life with negative net worth. Social security, part time work, shared housing & credit cards will be their retirement.
I don't think the statistics bear out 90% having NEGATIVE net worth. But I do agree that the median person will never have over half a million in net worth. Income distribution in this (and many other) countries is pretty lopsided. Frame of reference has a pretty big impact. People often base their perceptions of wealth on those around them, and people tend to come into contact people like them. If I work at the Google headquarters, most of the people I talk to on a day to day basis make six figures and have significant wealth from stock. If I work at McDonalds, most people I talk to on a day to day basis are living hand to mouth. Neither the McDs worker nor the Google worker is seeing a true cross-section of society.

Keep in mind that the folks who post on boggleheads are generally at least in the top 10% of wealth accumulation, and a significant portion are in the top 1-2%. People who don't have wealth to invest tend not to look for internet discussions on investing- doubly so an investment forum built around a philosophy of slow and steady accumulation rather than wild get rich quick bets (like wallstreet bets).
allones
Posts: 38
Joined: Fri Apr 13, 2018 11:27 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by allones »

The study results state that the sample of 1000 respondents were "nationally representative of the US population." I take that to mean that younger people are more represented than people at or near retirement age.

As someone with roughly that net worth and 20+ years until social security is an option, I feel very comfortable letting time do its thing with the funds that I have, even if I stopped contributing tomorrow.

Also, the fine print on page 13:" Q.1: At what level of personal net worth would you say a person in your area could be considered financially comfortable?" It would take a pretty hefty study to normalize for location, so you gotta kind of take the thing for what it's worth.
User avatar
1210sda
Posts: 1862
Joined: Wed Feb 28, 2007 8:31 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by 1210sda »

This is a wonderful forum. However, it does provide a skewed view of financial reality as compared to many non-Bogleheads.

Also, as was mentioned earlier "where you live" has a huge impact on how much you'll need to be "comfortable".
Your financial obligations (mortgage, college expenses for kids, supporting elderly parents, etc.) also are a major consideration.

Based on this, $624k might be a lot, just right or not enough.
User avatar
backofbeyond
Posts: 386
Joined: Tue Apr 01, 2008 1:07 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by backofbeyond »

Having several recently retired friends and family members, the odd thing that struck me is how many of them don't plan on touching the principal of their next egg in retirement. It physically seem to cause them pain to watch their portfolio go down. Many (most?) have taken part time jobs that pay 1/5 of what their career jobs were, simply to stay above their orginal retirement portfolio number. My best friend earns $20k a year at a part time job (20 hrs a week) when a single good day in the market would equate to the same amount earned.

Even more odd, is most of them have very successful children that have no need for any of mom & dad's inheirentance. My hunch is that a draining portfolio gives some evidence of a mortal life and that the clock is ticking. But what do I know?
The question isn't at what age I want to retire, it is at what income. - George Foreman
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by willthrill81 »

grogu wrote: Tue May 18, 2021 6:46 am I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
I understand what you mean, but keep in mind that around half of Americans can't lay their hands on $400 without going into debt (I'm dead serious). $600k+ is far more money than what well over 100 million Americans will ever have. The median net worth of 65-69 years olds is barely over $200k, meaning that half have even less than that.

This may not be true of you, but many here don't realize how incredibly wealthy they really are compared to typical Americans.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
surfstar
Posts: 2633
Joined: Fri Sep 13, 2013 12:17 pm
Location: Santa Barbara, CA

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by surfstar »

So many Bogleheads are out of touch by so far that they don't even realize that they're out of touch.
Da5id
Posts: 3005
Joined: Fri Feb 26, 2016 8:20 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by Da5id »

willthrill81 wrote: Tue May 18, 2021 10:19 am
grogu wrote: Tue May 18, 2021 6:46 am I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
I understand what you mean, but keep in mind that around half of Americans can't lay their hands on $400 without going into debt (I'm dead serious). $600k+ is far more money than what well over 100 million Americans will ever have. The median net worth of 65-69 years olds is barely over $200k, meaning that half have even less than that.

This may not be true of you, but many here don't realize how incredibly wealthy they really are compared to typical Americans.
Yeah it's easy to get immersed in FIRE and 4% SWR and such and lose touch with how most people live. Many make do on social security or work paycheck to paycheck to barely make ends meet. 624K is beyond the wildest dreams of a good part of the US population. Though if you throw in the imputed value of social security and Medicare and such people do have more than they think.
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by willthrill81 »

surfstar wrote: Tue May 18, 2021 10:22 am So many Bogleheads are out of touch by so far that they don't even realize that they're out of touch.
And even then, most here are far more in touch than some, like Sam Dogen (aka the 'Financial Samurai'), who claimed not long ago that his family could not live comfortably on $250k of annual income in San Francisco.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
mbasherp
Posts: 615
Joined: Mon Jun 26, 2017 8:48 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by mbasherp »

willthrill81 wrote: Tue May 18, 2021 10:32 am
surfstar wrote: Tue May 18, 2021 10:22 am So many Bogleheads are out of touch by so far that they don't even realize that they're out of touch.
And even then, most here are far more in touch than some, like Sam Dogen (aka the 'Financial Samurai'), who claimed not long ago that his family could not live comfortably on $250k of annual income in San Francisco.
Agreed. His articles are like watching wrestling back in the 90’s. Some people might think it’s real, but it’s definitely not.
mervinj7
Posts: 1840
Joined: Thu Mar 27, 2014 3:10 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by mervinj7 »

willthrill81 wrote: Tue May 18, 2021 10:32 am
surfstar wrote: Tue May 18, 2021 10:22 am So many Bogleheads are out of touch by so far that they don't even realize that they're out of touch.
And even then, most here are far more in touch than some, like Sam Dogen (aka the 'Financial Samurai'), who claimed not long ago that his family could not live comfortably on $250k of annual income in San Francisco.
I don't think he claimed that he couldn't live comfortably, just that $250k provided a "typical" middle class lifestyle at the time along with maxing out tax-advantaged accounts. BTW, with the (further) rise in real estate prices since that article came out, the new budget is $400k/year.

https://www.financialsamurai.com/400k-income/
RXfiles
Posts: 169
Joined: Tue May 26, 2020 1:23 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by RXfiles »

what does financially comfortable mean? im late 20s and my networth is less than than and im financially comfortable by my definition. Im not stressed about money at all. I have an EF, no debt, disability and life insurance for me and my spouse, 529 for kids to come, nice house, and our expenses way lower than our income.
sawhorse
Posts: 3640
Joined: Sun Mar 01, 2015 7:05 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by sawhorse »

grogu wrote: Tue May 18, 2021 6:46 am I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
It depends on age. I would imagine that for almost anyone in their 70s being financially comfortable would mean not having to work. But for someone in their 40s and younger, VERY few would define financial comfort that way.
Last edited by sawhorse on Tue May 18, 2021 12:58 pm, edited 1 time in total.
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by willthrill81 »

mervinj7 wrote: Tue May 18, 2021 11:45 am
willthrill81 wrote: Tue May 18, 2021 10:32 am
surfstar wrote: Tue May 18, 2021 10:22 am So many Bogleheads are out of touch by so far that they don't even realize that they're out of touch.
And even then, most here are far more in touch than some, like Sam Dogen (aka the 'Financial Samurai'), who claimed not long ago that his family could not live comfortably on $250k of annual income in San Francisco.
I don't think he claimed that he couldn't live comfortably, just that $250k provided a "typical" middle class lifestyle at the time along with maxing out tax-advantaged accounts. BTW, with the (further) rise in real estate prices since that article came out, the new budget is $400k/year.

https://www.financialsamurai.com/400k-income/
I'm pretty sure that he used the 'cannot live comfortably' statement, though I cannot find it at the moment. However, it's splitting hairs at this point. He's already said that you cannot live a 'middle class' lifestyle on under $350k, and I guess the mark is now $400k. And all of that is despite the fact that $350k is probably about triple the median household income for San Francisco.

He's living in a bubble with a relatively tiny proportion of the population that is almost incomprehensible to those outside the bubble.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
User avatar
willthrill81
Posts: 25278
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by willthrill81 »

sawhorse wrote: Tue May 18, 2021 12:55 pm
grogu wrote: Tue May 18, 2021 6:46 am I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
It depends on age. I would imagine that for anyone in their 70s being financially comfortable would mean not having to work. But for someone in their 40s and younger, I can't imagine that anyone would define financial comfort that way.
I agree. We are most definitely financially comfortable, but we're at least a decade away from being FI.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
RetiredAL
Posts: 1415
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by RetiredAL »

David Jay wrote: Tue May 18, 2021 7:27 am
The $25K mentioned in the OP, coupled with a "35 year" Social Security benefit and a paid-off mortgage, could provide a comfortable life for about 80% of Americans.
+1

I live in a VHCOL area on the left coast and we are doing quite well using just $24-27K of IRA withdrawals along with our SS in meeting our expenses. The expected RMD, starting next year, will be near double that, We also have a pile of Roth $ between near 20 years of max contributions + modest yearly conversions.
getthatmarshmallow
Posts: 893
Joined: Mon Dec 04, 2017 9:43 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by getthatmarshmallow »

That number sounds somewhere between high-and-reasonable to me, especially for a retiree. Many, many people are fine with a paid-off house, social security, Medicare, and a small amount of savings (many more don't even have that.) That's not going to keep you flying to Europe or buying Teslas, but it allows you a nice vacation to visit the grandkids, a Camry, the ability to keep up your house, pursue most hobbies, and spring for the fancy cable package. A lot of the comforts of life aren't that expensive.
Wrench
Posts: 301
Joined: Sun Apr 28, 2019 10:21 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by Wrench »

grogu wrote: Tue May 18, 2021 12:34 am https://www.cnbc.com/2021/05/17/net-wor ... table.html

Assuming a 4% withdrawal rate, that’s only $25k per year. And that assumes none of the net worth is tied up in a house.

To be fair, if you look at the underlying results, the survey respondents gave larger numbers for the amounts needed “for financial happiness” ($1.1M) and “to be wealthy” ($1.9M). Still, $624k is what they said is needed to be “comfortable,” not “survivable.” And 45% of the respondents (women) gave an average answer of only $325k (men’s average was $864k), which is only $13k a year at 4% withdrawal rate! Maybe they surveyed a disproportionate number of people with fat pensions.
Sounds about right to me. Assume a couple has paid off their mortgage so housing expenses are low. In most places outside of HCOL areas, one could pretty easily live on $50K-$60K per year. With SS for a couple of about the average ~$18K/year each, and $25K per year from portfolio that gives a reasonably comfortable retirement. Not extravagant mind you, but certainly comfortable. And, if necessary, such a couple could tap into home equity with a HECM for additional income.

Wrench
marcopolo
Posts: 4319
Joined: Sat Dec 03, 2016 10:22 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by marcopolo »

grogu wrote: Tue May 18, 2021 6:46 am
sawhorse wrote: Tue May 18, 2021 1:04 am I'm not sure why you're mentioning a 4% withdrawal rate. The survey covered all age groups and wasn't about retirement. The question is so vague that I'm not sure what they were trying to measure.
I wouldn’t consider myself “financially comfortable” unless I didn’t need to work. And I can’t imagine investable assets (let alone a net worth) of $624k producing enough income to allow very many people to live off of “comfortably,” especially considering the survey included people who are still working.

But I do agree with those who say the respondents didn’t put much thought into their numbers. At least I hope that’s the case.
You never feel/felt "financially comfortable" while progressing in your career?!?

The $624k seems about in the right ballpark to me.
Looking back, when I got to about $500k in invested assets, I felt pretty comfortable. I had a good paying job, but knew I had sufficient assets that I could leave it if things went south and live comfortably while I searched for the next opportunity that was right for my career. I didn't need to have the full retirement "number" in place to feel comfortable, because I still plenty of human capital left.
Once in a while you get shown the light, in the strangest of places if you look at it right.
JackoC
Posts: 2316
Joined: Sun Aug 12, 2018 11:14 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by JackoC »

sawhorse wrote: Tue May 18, 2021 1:04 am I'm not sure why you're mentioning a 4% withdrawal rate. The survey covered all age groups and wasn't about retirement. The question is so vague that I'm not sure what they were trying to measure.
I agree, '4% rule' is shoehorning the answer to a fuzzy question into a popular theme on this forum but not as much generally. The actual question 'At what level of personal net worth would you say a person in your area could be considered financially comfortable?' is not even asking directly what the person thinks about their own situation, and 'upon retirement' is not in there either.

Averaging all parts of the country (there's an obviously big overrepresentation here of the San Fran area, maybe other expensive areas too, besides overrepresentation of well off people generally), I'd say $600k+, including home equity, is not surprising. That's several times times the national household median, though slightly below the (less meaningful) average. Also despite the question nominally being about other people, respondents tend to think of people like themselves when answering. So as one good but extreme example here in the inner NY area, you often hear people (though outsiders tend to exaggerate it more) saying you need $250k, $500k/yr income or some other ridiculous number, to be 'middle class' in NY. But actually the median income in the City is only slightly above the national median. But I guess if you asked people here who are college educated and work white collar jobs in Manhattan they'd answer >>$600k. They would probably not fully factor in the few million people in their 'town' who live in rent stabilized or public housing, live in part on public benefits/subsidies in their working years, will live basically exclusively on public benefits in retirement if their income situation doesn't improve later in working years, and who in general will get by.
stoptothink
Posts: 9436
Joined: Fri Dec 31, 2010 9:53 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by stoptothink »

Wrench wrote: Tue May 18, 2021 1:58 pm
grogu wrote: Tue May 18, 2021 12:34 am https://www.cnbc.com/2021/05/17/net-wor ... table.html

Assuming a 4% withdrawal rate, that’s only $25k per year. And that assumes none of the net worth is tied up in a house.

To be fair, if you look at the underlying results, the survey respondents gave larger numbers for the amounts needed “for financial happiness” ($1.1M) and “to be wealthy” ($1.9M). Still, $624k is what they said is needed to be “comfortable,” not “survivable.” And 45% of the respondents (women) gave an average answer of only $325k (men’s average was $864k), which is only $13k a year at 4% withdrawal rate! Maybe they surveyed a disproportionate number of people with fat pensions.
Sounds about right to me. Assume a couple has paid off their mortgage so housing expenses are low. In most places outside of HCOL areas, one could pretty easily live on $50K-$60K per year. With SS for a couple of about the average ~$18K/year each, and $25K per year from portfolio that gives a reasonably comfortable retirement. Not extravagant mind you, but certainly comfortable. And, if necessary, such a couple could tap into home equity with a HECM for additional income.

Wrench
"Average" total household expenses in the U.S. are ~$63k/yr https://www.thebalance.com/breakdown-of ... es-4687519. That includes housing, things like childcare, and usually feeding more than two mouths. $50-$60k for two with minimized housing expenses is a pretty high standard of living for most, in most of the country.
Da5id
Posts: 3005
Joined: Fri Feb 26, 2016 8:20 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by Da5id »

grogu wrote: Tue May 18, 2021 6:46 am
sawhorse wrote: Tue May 18, 2021 1:04 am I'm not sure why you're mentioning a 4% withdrawal rate. The survey covered all age groups and wasn't about retirement. The question is so vague that I'm not sure what they were trying to measure.
I wouldn’t consider myself “financially comfortable” unless I didn’t need to work. And I can’t imagine investable assets (let alone a net worth) of $624k producing enough income to allow very many people to live off of “comfortably,” especially considering the survey included people who are still working.

But I do agree with those who say the respondents didn’t put much thought into their numbers. At least I hope that’s the case.
I guess the definition of "financially comfortable" is malleable. I've been "financially comfortable" my whole life. Including when in graduate school and not making lots of money. I had enough money to live on and was fine with my standard of living. I was confident in my ability to continue to earn enough money to continue to be satisfied with my standard of living and to have enough to retire on. And did end up doing OK and retiring early. I guess part of my being "comfortable" was that my parents, while not ultra wealthy, had enough money that should I have fallen on hard times I had a backstop. Never happened, but I guess knowing that help is there if needed is part of being comfortable that many people don't have.
Independent George
Posts: 1279
Joined: Wed Feb 17, 2016 12:13 pm
Location: Chicago, IL, USA

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by Independent George »

grogu wrote: Tue May 18, 2021 12:34 am https://www.cnbc.com/2021/05/17/net-wor ... table.html

Assuming a 4% withdrawal rate, that’s only $25k per year. And that assumes none of the net worth is tied up in a house.

To be fair, if you look at the underlying results, the survey respondents gave larger numbers for the amounts needed “for financial happiness” ($1.1M) and “to be wealthy” ($1.9M). Still, $624k is what they said is needed to be “comfortable,” not “survivable.” And 45% of the respondents (women) gave an average answer of only $325k (men’s average was $864k), which is only $13k a year at 4% withdrawal rate! Maybe they surveyed a disproportionate number of people with fat pensions.
Those numbers align almost perfectly with my own thoughts on the matter. I crossed $600k net worth in December, and 'comfortable' is exactly how I described it. That doesn't mean I'm ready to quit my job today and live off my savings; it means I'm no longer worried day and night about my finances. I can take a 50% pay cut tomorrow, not save another dollar for the rest of my life, and still pay off my mortgage and let compounded gains earn me a comfortable retirement at age 67. Obviously that doesn't mean I want to take a 50% pay cut, or stop saving, but it takes a lot of pressure off of me.

If I had $1.1M at my current age (44), I'd continue to work and save while de-risking my portfolio. It's not enough to feel comfortable retiring immediately, but I'd be very happy.

If I had $1.9M, I'd retire immediately because, yes, that would make me wealthy enough to live a life of complete leisure.
delamer
Posts: 11485
Joined: Tue Feb 08, 2011 6:13 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by delamer »

The top 10% of US families held 3/4 of all the wealth: https://www.stlouisfed.org/open-vault/2 ... statistics

My guess is that the overwhelming majority of poster on this forum are in that group, or will be before they retire.

To make it into the top 50%, a family needed wealth of $122,000 or more.

So $624,000 is a dream for most families in our country.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
MAKsdad
Posts: 76
Joined: Wed Mar 17, 2021 7:43 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by MAKsdad »

grogu wrote: Tue May 18, 2021 6:46 am
sawhorse wrote: Tue May 18, 2021 1:04 am I'm not sure why you're mentioning a 4% withdrawal rate. The survey covered all age groups and wasn't about retirement. The question is so vague that I'm not sure what they were trying to measure.
I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
While I don't doubt the truth of your statement for you personally, I sincerely doubt that's how the poll responders took it. Personally, I felt "financially comfortable" when I made $37k per year and had student loan debt of >$100k. Why? Because I had a good job and knew I was performing well enough to continue getting promotions and raises. I think "financially comfortable" means you can pay your bills, have a little fun, buy a car when you need it and survive an emergency without incurring debt. Net worth has nothing to do with it.
dboeger1
Posts: 594
Joined: Fri Jan 13, 2017 7:32 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by dboeger1 »

I'm always blown away when I read those occasional news stories about waitstaff getting tipped $2k for a water or something like that. The thing that surprises me is how they often say that the money will completely change their life. I could understand if they were sending the money abroad to a poorer country or something, but for those living in the US, as much as I respect their gratitude and financial hardship, I really can't imagine a situation in which a nominal amount of a few thousand dollars could be that life-changing. I suppose someone whose income is barely enough to service their debt interest would see the most significant improvement from a small cash injection, but that assumes they don't go and spend up to their credit limit again right after, which often seems to be the case. It's sad, but I think so many people agree just extremely financially illiterate, even despite having sufficient education and intelligence to understand the issues. Anyone with even just the ability to save a little bit each paycheck will eventually get to $2k of savings and beyond, but it's like there's a mental block that doesn't allow people to prioritize savings. Virtually every one of those stories ends with the money basically being spent before it's counted.
User avatar
Abe
Posts: 2264
Joined: Fri Sep 18, 2009 5:24 pm
Location: Earth in the Milky Way Galaxy

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by Abe »

I think the Boglehead community in general is oblivious to how the rest of the world lives. There are a lot of people in this country who live pay check to pay check, if they get a pay check at all. They feel fortunate if they have enough money to buy food and pay the rent. They are short term thinkers by necessity. To them $624k is all the money in the world. In their view that amount of money would solve all their problems.
Slow and steady wins the race.
starboi
Posts: 73
Joined: Fri Apr 23, 2021 11:33 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by starboi »

Well the average millennial has a net worth of $18k so, $624k probably sounds pretty good to them at least.
lostdog
Posts: 4089
Joined: Thu Feb 04, 2016 2:15 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by lostdog »

willthrill81 wrote: Tue May 18, 2021 10:19 am
grogu wrote: Tue May 18, 2021 6:46 am I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
I understand what you mean, but keep in mind that around half of Americans can't lay their hands on $400 without going into debt (I'm dead serious). $600k+ is far more money than what well over 100 million Americans will ever have. The median net worth of 65-69 years olds is barely over $200k, meaning that half have even less than that.

This may not be true of you, but many here don't realize how incredibly wealthy they really are compared to typical Americans.
That 200k networth is mostly their home.
starboi
Posts: 73
Joined: Fri Apr 23, 2021 11:33 am

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by starboi »

willthrill81 wrote: Tue May 18, 2021 10:32 am
surfstar wrote: Tue May 18, 2021 10:22 am So many Bogleheads are out of touch by so far that they don't even realize that they're out of touch.
And even then, most here are far more in touch than some, like Sam Dogen (aka the 'Financial Samurai'), who claimed not long ago that his family could not live comfortably on $250k of annual income in San Francisco.
Well, that was his number for a family to live a "middle class lifestyle" in SF. Which probably isn't far off, given that the poverty level is $117,400 for a family of four in SF (2018 HUD figure).
sawhorse
Posts: 3640
Joined: Sun Mar 01, 2015 7:05 pm

Re: Schwab survey: Net worth of $624k is all that's needed to be “financially comfortable”

Post by sawhorse »

willthrill81 wrote: Tue May 18, 2021 10:19 am
grogu wrote: Tue May 18, 2021 6:46 am I wouldn’t consider myself “financially comfortable” unless I didn’t need to work.
I understand what you mean, but keep in mind that around half of Americans can't lay their hands on $400 without going into debt (I'm dead serious). $600k+ is far more money than what well over 100 million Americans will ever have. The median net worth of 65-69 years olds is barely over $200k, meaning that half have even less than that.

This may not be true of you, but many here don't realize how incredibly wealthy they really are compared to typical Americans.
And how much more they spend than the average American. A lot of people on this board think they are low spenders when in reality they live more extravagantly than the average American (because they can comfortably afford to).
Post Reply