How Much Is The Value of Your Net Worth Important to You?

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rossington
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How Much Is The Value of Your Net Worth Important to You?

Post by rossington » Sun Dec 01, 2019 4:03 pm

You have achieved your portfolio value goal and now you will be retiring or have already retired.

The success and accomplishment of achieving this (no matter how you got there) plus all of your other assets has given you a net worth that is (or may be) the most you have ever had in your lifetime. This obviously is a wonderful financial situation to be in. The comfort and peace of mind a very secure financial net worth provides us is invaluable.

Your retirement income strategy has been well planned out. But now do you feel that because of the value of your net worth you do not want to ever be worth any less?

Have you changed your retirement withdrawl strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time? (Let's assume we will all be unhappy if the market tanks for an extended period,I am talking about "normal" drawdowns).

Does it matter to you at all?
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by midareff » Sun Dec 01, 2019 4:09 pm

If it was zero and you could derive no income from it for the rest of your life how important would that be?

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by David Jay » Sun Dec 01, 2019 4:27 pm

If I had to wait until my net worth never dropped, I would have to work to age 70. No thanks.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by 3funder » Sun Dec 01, 2019 4:29 pm

It's entertaining and fun to see it increase. That's about it.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Bir48die » Sun Dec 01, 2019 4:44 pm

It a partial measure to help you understand the total picture. Your portfolio worth is a better gauge but if you’re looking at NW then you should also understand your debt load. Since many times NW includes property and it’s not liquid then it’s better to pull that from your mindset.

I have a balance sheet which breaks down cash & investments. That’s is what is important to me along with generated income. Since I’m retired investment income is important. I’m debt free so liabilities are not an issue. We know the value of our home and other than that we don’t deal with it.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by ruralavalon » Sun Dec 01, 2019 5:12 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
You have achieved your portfolio value goal and now you will be retiring or have already retired.

The success and accomplishment of achieving this (no matter how you got there) plus all of your other assets has given you a net worth that is (or may be) the most you have ever had in your lifetime. This obviously is a wonderful financial situation to be in. The comfort and peace of mind a very secure financial net worth provides us is invaluable.

Your retirement income strategy has been well planned out. But now do you feel that because of the value of your net worth you do not want to ever be worth any less?

Have you changed your retirement withdrawl strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time? (Let's assume we will all be unhappy if the market tanks for an extended period,I am talking about "normal" drawdowns).

Does it matter to you at all?
Age 74, retired 9 years.

Net worth is an interesting number to know, but has little impact on our lives. Net worth includes the value of our home, which we own mortgage free. It is illiquid, and we cannot spend it to pay our living expenses in retirement.

We have not changed withdrawal strategy to maintain net worth.

We do care about net worth.

Our net worth has been increasing since my retirement, because of the happy accident of good stock market returns. This year so far investment returns have been more than three times as large as our portfolio withdrawals.
Last edited by ruralavalon on Sun Dec 01, 2019 5:16 pm, edited 1 time in total.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Broken Man 1999 » Sun Dec 01, 2019 5:12 pm

I know our net worth, but I don't pay that much attention to it. Our net worth includes our home, furnishings, a 2008 vehicle, and personal items.

But, our retirement portfolio is the thing that pays for our lifestyle, not the items that are added to it to determine our net worth.

I know from observing the sales in our neighborhood that our home's value is steadily increasing.

We have no mortgage, or any other debt, so our home's equity and our net worth isn't muddled with any type of debt issues.

Our net worth has been steadily increasing, driven primarily by our retirement portfolio.

I am confident our net worth will decline at some point in time. When it does, and it surely will, our retirement portfolio will still provide the current standard of living. That is all I can say about our net worth. It is what it is.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Artsdoctor » Sun Dec 01, 2019 5:19 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
You have achieved your portfolio value goal and now you will be retiring or have already retired.

The success and accomplishment of achieving this (no matter how you got there) plus all of your other assets has given you a net worth that is (or may be) the most you have ever had in your lifetime. This obviously is a wonderful financial situation to be in. The comfort and peace of mind a very secure financial net worth provides us is invaluable.

Your retirement income strategy has been well planned out. But now do you feel that because of the value of your net worth you do not want to ever be worth any less?

Have you changed your retirement withdrawl strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time? (Let's assume we will all be unhappy if the market tanks for an extended period,I am talking about "normal" drawdowns).

Does it matter to you at all?
Yes, it matters to us a great deal. We anticipate our net worth to be decreasing steadily as we age. If we were die before our net worth decreased substantially, we'd be pretty upset!

I don't think that spending down to zero is practical, but I'd like to get close. You can't take it with you.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by LadyGeek » Sun Dec 01, 2019 5:28 pm

This thread is now in the Personal Finance (Not Investing) forum (Net worth, behavioral finance).
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Wricha » Sun Dec 01, 2019 5:34 pm

Recently, about 10 years ago I began focusing on cash flow vs net worth. It’s a better data point particularly in retirement.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by GrowthSeeker » Sun Dec 01, 2019 5:38 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
You have achieved your portfolio value goal and now you will be retiring or have already retired.
Yes.
Does it matter to you at all?
First of all, I own a house and a car, no debt; no liabilities. Although they are part of my NW, I don't count them. I just track my invest-able assets including cash. I know cash isn't "invested", but it's easier to just count all the account values.
I very much enjoy tracking it, graphing it out. I wonder if and when it will ever hit the next milestone. But it's like a game. I know that when the market corrects, the number will drop. Oh well. I know that in the next year or two, I will need to get a new car and a new phone. I'll take a trip or 2 or 3 or 4. And my NW number is going to drop. But when it drops a bunch, I'll just draw new trend lines and figure the next milestone.

When I was a little kid, I would sometimes get a birthday or holiday card with a dollar bill in it. I saved all the dollar bills (and the occasional 5) in an envelope. Every once in a while I would take out the envelope and count the dollars. I'm just doing the same thing now. I haven't changed much in 60 years, I guess. Except, now I have a much bigger envelope.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by JoeRetire » Sun Dec 01, 2019 5:42 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
You have achieved your portfolio value goal and now you will be retiring or have already retired.
Yes I have.
The success and accomplishment of achieving this (no matter how you got there) plus all of your other assets has given you a net worth that is (or may be) the most you have ever had in your lifetime.
Yes it has.
This obviously is a wonderful financial situation to be in. The comfort and peace of mind a very secure financial net worth provides us is invaluable.
It's nice. Not invaluable at all.
Your retirement income strategy has been well planned out. But now do you feel that because of the value of your net worth you do not want to ever be worth any less?
Certainly not. I want my wife and I to enjoy the rest of our lives. That's the whole point of accumulating the money in the first place. Keeping it at some magic number isn't meaningful at all.
Have you changed your retirement withdrawl strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time?
Definitely not. I won't have that regret. My assets may or may not diminish over time, depending on how the market does. I fully expect it to last our lifetimes and beyond. That's all I care about.
Does it matter to you at all?
Not at all.

I don't measure myself by my net worth.
Don't be a lemming.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Theseus » Sun Dec 01, 2019 5:47 pm

Surpassed my goals by 50%. So there is a very remote chance of us running out of money before we pass. However having retired at 50 (now almost 53) I still would want my net worth to remain stable until I am 65. This is just a psychological thing. From a rational numbers standpoint this thinking makes no sense. But it is what it is.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by marcopolo » Sun Dec 01, 2019 5:52 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
You have achieved your portfolio value goal and now you will be retiring or have already retired.

The success and accomplishment of achieving this (no matter how you got there) plus all of your other assets has given you a net worth that is (or may be) the most you have ever had in your lifetime. This obviously is a wonderful financial situation to be in. The comfort and peace of mind a very secure financial net worth provides us is invaluable.

Your retirement income strategy has been well planned out. But now do you feel that because of the value of your net worth you do not want to ever be worth any less?

Have you changed your retirement withdrawl strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time? (Let's assume we will all be unhappy if the market tanks for an extended period,I am talking about "normal" drawdowns).

Does it matter to you at all?
Quite the opposite. I would feel regret if I was not drawing down our portfolio. That is what it is there for.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Rus In Urbe » Sun Dec 01, 2019 5:55 pm

As Bir48die wrote: I have a balance sheet which breaks down cash & investments. That’s is what is important to me along with generated income. Since I’m retired investment income is important. I’m debt free so liabilities are not an issue. We know the value of our home and other than that we don’t deal with it.
+1
I focus on the investments/cash number.
I have a good idea what our paid-off house would net us were we to sell it (no plans for that) and the remaining assets I don't even try to assess.

I retire this week! I worked long enough and our expenses are liberally estimated at such a rate that I expect our assets will remain stable, if not increase, during retirement. With an AA of 50/50 and WR of about 3%, I feel confident about our situation. Even in a severe downturn, I've got CDs and other backstops set aside. Were we to hit a Japan-style event or a Great Depression lasting more than a decade, yeah, that would bite. But then we would just cut back like everyone around us, presumably.

How important is that number to me?
As a measure of my own self worth, ZERO importance.
As a measure of my sense of security overall, somewhat important.
As a measure of possible financial security in the future, important.

To me, it is essential to keep those factors separate.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by UpperNwGuy » Sun Dec 01, 2019 5:59 pm

I don't care about my net worth. It's a pretty useless concept. I do, however, care about the size of my investment portfolio.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by RickBoglehead » Sun Dec 01, 2019 6:03 pm

Question is nonsensical since every dollar spent is a negative impact on what net worth could have been.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by WoodSpinner » Sun Dec 01, 2019 6:03 pm

Net worth can be an interesting behavioral anchor that generally works well during accumulation but can work against you during the decumulation in retirement.

For example, one of the hardest decisions I faced in preparation for retirement was what to do with my company pension. I included the lump sum value in my Net-worth for my 32 year career. Updated it yearly and it became a driver for dependable growth, especially during the dark days of the GFC. When I was thinking of converting this to a monthly pension, I had a hard time with the fact my Net-worth was decreasing (by about 20% !) since I was converting to a pension. I really struggled with this issue but finally was able to let go of this anchor and convert.

It was definitely the right move financially but very challenging to see that number go down!

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Phineas J. Whoopee » Sun Dec 01, 2019 6:10 pm

I'm not sure I understand the question as expounded. Is it the same as never selling any shares but spending distributions, pretending that means spending doesn't decrease assets?
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by ruralavalon » Sun Dec 01, 2019 6:13 pm

Congratulations on your retirement :D .

Rus In Urbe wrote:
Sun Dec 01, 2019 5:55 pm
As Bir48die wrote: I have a balance sheet which breaks down cash & investments. That’s is what is important to me along with generated income. Since I’m retired investment income is important. I’m debt free so liabilities are not an issue. We know the value of our home and other than that we don’t deal with it.
+1
I focus on the investments/cash number.
I have a good idea what our paid-off house would net us were we to sell it (no plans for that) and the remaining assets I don't even try to assess.

I retire this week! I worked long enough and our expenses are liberally estimated at such a rate that I expect our assets will remain stable, if not increase, during retirement. With an AA of 50/50 and WR of about 3%, I feel confident about our situation. Even in a severe downturn, I've got CDs and other backstops set aside. Were we to hit a Japan-style event or a Great Depression lasting more than a decade, yeah, that would bite. But then we would just cut back like everyone around us, presumably.

How important is that number to me?
As a measure of my own self worth, ZERO importance.
As a measure of my sense of security overall, somewhat important.
As a measure of possible financial security in the future, important.

To me, it is essential to keep those factors separate.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by bayview » Sun Dec 01, 2019 6:19 pm

It’s interesting and amusing to track, as it was pretty darn low as recently as ten years ago.

It’s still creeping up. We’re retired but haven’t withdrawn from the portfolio yet.

We’re both retired now, and the focus is firmly on cash flow.

I suppose that I might feel a slight “ouch” when it first dips, but it won’t influence anything. The whole point of our saving and investing was to finance retirement. If we never used it, it would be like having a small farm or huge garden, harvesting and preserving the crops, and leaving hundreds of Mason jars to gather dust in the pantry. Doesn’t make much sense.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Doom&Gloom » Sun Dec 01, 2019 6:21 pm

RickBoglehead wrote:
Sun Dec 01, 2019 6:03 pm
Question is nonsensical since every dollar spent is a negative impact on what net worth could have been.
+1

Seems like a silly mental exercise.

FTR I don't even track NW.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by amitb00 » Sun Dec 01, 2019 6:32 pm

Basically what OP wants to say that NW should be so high that increase every year should be more than what you withdrew. This way NW never goes down. Seems like perpetual withdrawal amount, stated in a different way.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by drawpoker » Sun Dec 01, 2019 7:05 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
......now you will be retiring or have already retired.........because of the value of your net worth you do not want to ever be worth any less?.....feel regret if your assets are otherwise going to possibly diminish over time? (Let's assume we will all be unhappy if the market tanks for an extended period,I am talking about "normal" drawdowns).
What do you consider normal drawdowns? The 4% doctrine? Less? More? You want to assume that bear markets should be excluded for the purposes of discussion here. But, can you? Do that?

Investors now in their sixties or seventies have lived through so many of them (compared to younger folks) Unless they are afflicted with amnesia - most of them are going to instinctively reduce their "normal" drawdowns when the bear comes. Aren't they?

Which plan do you prefer, to die with more money, or die with less money? For me, it's the latter, no deep thinking required :P

Of course, as VG keeps beating people over the head with during their many webinars :wink: , both AA and withdrawal rates will vary greatly among retirees of approx. same ages. One big factor for this is whether one has a legacy component, or not, when making estate plans.

People who don't have immediate family or other heirs to consider - no legacy requirements - leaving bulk of estate to charity - are likely un-concerned with most of the questions OP raises.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by dcdowden » Sun Dec 01, 2019 7:11 pm

We have tracked the net worth of all of our investment assets (not including house, mortgage, cars, etc) since we were first married over 43 years ago.We have done this each month. In the early days when we had very little, we included cash in our pockets as well as credit card receipts and we did this once a month when we paid our bills. It is trivial today to do that on a daily basis if you want using any of the tools available online. I always found it useful to get an overall view of trends - either up or down. We always tracked short term (ie., cash), intermediate (ie., taxable investment accounts) and long term (ie., retirement accounts) separately, so we could see trends in each of those categories as well as overall. These days the overall net worth number is dominated by longer term investment results. It can be a comforting or concerning number depending on the market and it does affect my overall Asset Allocation decisions. But I now look more closely at our short term cash flow of income and expenses that I have more direct control over.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by snackdog » Sun Dec 01, 2019 7:32 pm

It is easy enough - just work until 62 then live on SS alone. Your net worth will likely increase the rest of your life, even if you don't have much saved at retirement.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by arsenalfan » Sun Dec 01, 2019 7:42 pm

Passive income streams are the floor for your retirement lifestyle.

For most it means SS, and ~2-4% of your portfolio. More if you're closer to death.

I've worked for rental income to add to SS. Still looking for other passive income streams.

I watch NW number annually, with assumption that the amount of NW that is in equities can go down by 50%.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Dottie57 » Sun Dec 01, 2019 7:49 pm

3funder wrote:
Sun Dec 01, 2019 4:29 pm
It's entertaining and fun to see it increase. That's about it.
This.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by RadAudit » Sun Dec 01, 2019 7:55 pm

Net worth, after getting to point of having a fairly decent assurance of having enough for the duration, is really not that important as a number. I've been retired for 9 years and I fully expect net worth to decline in another 10 to 12 years.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by MathWizard » Sun Dec 01, 2019 8:03 pm

I plan on waiting to claim SS at 70 and to do Roth conversions up to the top of the 12 or 15% bracket

This means I will be decreasing my net worth by about 25% , though that is deceptive in that money in a Roth funds is worth more than in tax deferred.

This strategy is optimal for what I feel is the most likely scenario in our case.

After age 70, the portfolio will likely to gain slowly until I die ,( probably at about age 85 ) , then will slowly diminish for the next 15 years. If my wife is still alive at age 100, she would start spending down assets if she needs them.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by baconavocado » Sun Dec 01, 2019 8:09 pm

I use my net worth as a barometer for my overall financial health, so it's extremely important to me. And by net worth, I mean the value of all my assets, including my real property, pensions/annuities, misc valuables (including vehicles), as well as financial assets. Although I understand the negative psychological effect of seeing the value go down, my goal is for our net worth to trend toward zero, or maybe to 10% of its peak value, by the time of my wife's death (assuming I die before her).

Reading some of the other comments reminds me that money becomes less and less important as we grow older, as long as we have enough to sustain our current lifestyles. So if you've got a lot, or maybe more than you need, spend it while you're young(er), while it still means something.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Sandtrap » Sun Dec 01, 2019 9:11 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm
1
You have achieved your portfolio value goal and now you will be retiring or have already retired.
2
The success and accomplishment of achieving this (no matter how you got there) plus all of your other assets has given you a net worth that is (or may be) the most you have ever had in your lifetime. This obviously is a wonderful financial situation to be in. The comfort and peace of mind a very secure financial net worth provides us is invaluable.
3
Your retirement income strategy has been well planned out.
b
But now do you feel that because of the value of your net worth you do not want to ever be worth any less?
4
Have you changed your retirement withdrawl strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time? (Let's assume we will all be unhappy if the market tanks for an extended period,I am talking about "normal" drawdowns).

Does it matter to you at all?
1 > yes (dw and I count our blessings daily)
2 > yes
3 > yes (thank you bogleheads!)
b) it would take some effort and lack of frutality for this to happen
4 > no (not needed) , not applicable
*fwiw, i am vaguely conscious of my net worth as a rough guestimate, but it's not something that's useful/actionable to me.
j :happy
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Sandtrap » Sun Dec 01, 2019 9:14 pm

baconavocado wrote:
Sun Dec 01, 2019 8:09 pm
I use my net worth as a barometer for my overall financial health, so it's extremely important to me. And by net worth, I mean the value of all my assets, including my real property, pensions/annuities, misc valuables (including vehicles), as well as financial assets. Although I understand the negative psychological effect of seeing the value go down, my goal is for our net worth to trend toward zero, or maybe to 10% of its peak value, by the time of my wife's death (assuming I die before her).

Reading some of the other comments reminds me that money becomes less and less important as we grow older, as long as we have enough to sustain our current lifestyles. So if you've got a lot, or maybe more than you need, spend it while you're young(er), while it still means something.
+1
Absolutely!
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by afan » Sun Dec 01, 2019 9:35 pm

Not retired.

Net worth is important, since that is what we will live on come retirement and ultimately what we will pass along to heirs.

It is not realistic to expect it never to go down. Little of it is held in cash, so stocks, bonds and real estate change value every day.

Long term, we expect the net worth, on average, to increase throughout retirement. That is, our annual investment returns will exceed our taxes and spending. So we would not draw down the assets. This is the margin of safety for retirement planning.

Since financial assets are invested in cap weighted index funds, I don't need to check the total value to know how it is behaving. If the markets went up, then net worth went up. If they went down then NW went down.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by investorpeter » Sun Dec 01, 2019 9:39 pm

My ideal net worth curve is a bell curve.

Net worth is still worth tracking even after the accumulation phase, but only to adjust spending. If net worth continues increasing after retirement, I would either trim risk, increase spending or both.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by HomerJ » Sun Dec 01, 2019 9:52 pm

The first few years (decade?) of retirement, I'll be happier if net worth keeps going up. It will indeed bother me if net worth goes down early on.

But after 10 years for sure (less time left, and SS checks will be coming in), I won't have any problems spending some of it down. I'm sure we'll be giving some away and taking kids and grandkids on big trips and/or paying for grandkids college to make sure it goes down.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Stoic9 » Mon Dec 02, 2019 11:24 am

I did not have a leave it to beaver childhood, I left at 17 with $10 in my pocket (a gift from someone). When I retired 2.5 years ago I was shocked (even though I had planned and tracked my retirement.
1. passive income of almost 200K (will add SS to this in 8 years)
2. Portfolio 7 figures
3. Rental Properties 7 figures
4. Personal assets (house, cars, etc) 1/2 million
5. zero debt.
6. We travel, spend half year out of the country, enjoy ourselves but have frugal taste.

My NW has increased since I retired. I haven't figured how to spend it yet. It is hard, I enjoy watching it go up and up and still feel the shock of where I am financially. My other retirement plans (health and relationships) are also doing well. So I'm happy to be retired but the Net Worth part I now concentrate on my assumptions. I assume LE of 75 plus minus 2 years (now 62), Wife 90 plus minus 4 years (now 59), daughter...now 30ish. When I die our passive income will drop 45% (today's dollars).

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by SQRT » Mon Dec 02, 2019 12:20 pm

Retired 13 years. 69 years old. Net worth at an all time time despite systematic fairly small sell downs over last 3 years and big gift to daughter for house down payment. This is more significant than you might think as our portfolio doesn’t have any US securities in it. Planning to rebuild our lake house over next 30 months. This will probably result in a net worth decline. I figure you can’t take it with you.

Big reason to watch your net worth is primarily to ensure you don’t run out. Other reasons are your ego and estate planning. I estimate my net worth all the time, but only in my head to the nearest $million. Close enough.
Last edited by SQRT on Mon Dec 02, 2019 7:27 pm, edited 1 time in total.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by TravelforFun » Mon Dec 02, 2019 12:30 pm

David Jay wrote:
Sun Dec 01, 2019 4:27 pm
If I had to wait until my net worth never dropped, I would have to work to age 70. No thanks.
I am retired now and because I'm using a 3% SWR, I anticipate my net worth would be higher when we die than what it is now.

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Last edited by TravelforFun on Mon Dec 02, 2019 12:37 pm, edited 1 time in total.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by mptfan » Mon Dec 02, 2019 12:30 pm

RickBoglehead wrote:
Sun Dec 01, 2019 6:03 pm
Question is nonsensical since every dollar spent is a negative impact on what net worth could have been.
In general that is true, unless you buy something that has investment value, like a Silver or Gold Eagle coin.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by RickBoglehead » Mon Dec 02, 2019 1:14 pm

mptfan wrote:
Mon Dec 02, 2019 12:30 pm
RickBoglehead wrote:
Sun Dec 01, 2019 6:03 pm
Question is nonsensical since every dollar spent is a negative impact on what net worth could have been.
In general that is true, unless you buy something that has investment value, like a Silver or Gold Eagle coin.
So 99% of the time then. :wink:
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by rossington » Mon Dec 02, 2019 2:02 pm

Thanks for all the replies everyone...really appreciate them.

FWIW as early retirees that have achieved a comfortable net worth we still feel it makes sense to increase it (or at the very least not deplete it too much). If both or one of us lives another 25-30 years & because of all the big expenses life can throw at us (Medical, Assisted Living, LTC are at the top of the list) it gives us peace of mind knowing we will always hopefully have more than "enough" when we have to deal with large unforseen future expenses...and of course have an enjoyable retirement along the way. We don't want to be a burden to our son either. :happy
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by abuss368 » Mon Dec 02, 2019 2:13 pm

It may have been many years ago. With our transformation to simplifying our financial and non-financial lives, we don't formally track or keep any type of spreadsheet or files any longer regarding net worth.

Once in a while I may grab the calculator and it takes seconds to arrive at an estimate. When I do that I essentially add our cash, portfolio, and home equity. I don't bother to add any value for vehicles. The vehicle value is essentially close to the vehicle loan. Once the vehicle loan is paid off, the vehicle itself is probably not worth much or is immaterial to the overall net worth picture.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by abuss368 » Mon Dec 02, 2019 2:14 pm

I used to maintain a spreadsheet showing net worth over a decade or longer. I began to question the value and purpose. I have not calculated in a long time and no longer have any need to do so.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by GeoffD » Mon Dec 02, 2019 4:00 pm

Wricha wrote:
Sun Dec 01, 2019 5:34 pm
Recently, about 10 years ago I began focusing on cash flow vs net worth. It’s a better data point particularly in retirement.
This

What I care about is “I can spend $xx,000 per year and not run out of money”. I’m 61. I have a max Social Security check coming at age 70. I expect to put a big dent in my net worth over the next 8 1/2 years. At 70, my COLA-protected $45k Social Security check will be a big chunk of my cash flow. If I get it wrong and run out of money, I’ll still be fine in a paid for house and that Social Security check. I just won’t have the level of discretionary spending I’m used to. The house can be my long term care policy though males are less likely to have years of assisted living and memory care/skilled nursing facility bills.


I track my net worth in a spreadsheet but I use Great Recession valuations for my real estate and I don’t count little things like my car or sailboat that depreciate. I’m mostly tracking financial assets since I plan to spend those over time.
Last edited by GeoffD on Mon Dec 02, 2019 4:15 pm, edited 1 time in total.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by MikeG62 » Mon Dec 02, 2019 4:13 pm

rossington wrote:
Sun Dec 01, 2019 4:03 pm

1. Have you changed your retirement withdrawal strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time?

2. Does it matter to you at all?
1. No.
2. I'd certainly rather it be higher than lower, but we've got a plan and we are following it.

Retired in early 2016. NW increased in 2016 and again in 2017, declined in 2018 and is on pace for a large increase this year. Despite four years of withdrawals (and a fairly conservative asset allocation), NW was at an all-time high last week.
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Re: How Much Is The Value of Your Net Worth Important to You?

Post by Artful Dodger » Mon Dec 02, 2019 4:22 pm

The plan is that our net worth will decline in the years before both of us hit age 70, and start taking SS. This is also the period of time when I have built in a larger annual expense for travel, finishing off the mortgage, and paying off some student loans for our kids. Then there should be a slight decline as pension and SS covers all the necessary expenses, but we spend over that for whatever we want. We're also at a 50/50 equity to fixed allocation, so a market decline won't be as daunting. That's the plan. The retirement planner (Fidelity) still shows $900k remaining at our planned demise.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by dmcmahon » Mon Dec 02, 2019 4:48 pm

I’ll answer yes. I have twin goals, one is retirement income and the other is leaving a legacy. It matters to the latter goal.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by rossington » Mon Dec 02, 2019 5:43 pm

GeoffD wrote:
Mon Dec 02, 2019 4:00 pm
Wricha wrote:
Sun Dec 01, 2019 5:34 pm
Recently, about 10 years ago I began focusing on cash flow vs net worth. It’s a better data point particularly in retirement.
This

What I care about is “I can spend $xx,000 per year and not run out of money”. I’m 61. I have a max Social Security check coming at age 70. I expect to put a big dent in my net worth over the next 8 1/2 years. At 70, my COLA-protected $45k Social Security check will be a big chunk of my cash flow. If I get it wrong and run out of money, I’ll still be fine in a paid for house and that Social Security check. I just won’t have the level of discretionary spending I’m used to. The house can be my long term care policy though males are less likely to have years of assisted living and memory care/skilled nursing facility bills.


I track my net worth in a spreadsheet but I use Great Recession valuations for my real estate and I don’t count little things like my car or sailboat that depreciate. I’m mostly tracking financial assets since I plan to spend those over time.
Hope it works out much better than you think it will! I too feel a spreadsheet helps.
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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Re: How Much Is The Value of Your Net Worth Important to You?

Post by rossington » Mon Dec 02, 2019 5:47 pm

MikeG62 wrote:
Mon Dec 02, 2019 4:13 pm
rossington wrote:
Sun Dec 01, 2019 4:03 pm

1. Have you changed your retirement withdrawal strategy at all to maintain your comfortable net worth because you will feel regret if your assets are otherwise going to possibly diminish over time?

2. Does it matter to you at all?
1. No.
2. I'd certainly rather it be higher than lower, but we've got a plan and we are following it.

Retired in early 2016. NW increased in 2016 and again in 2017, declined in 2018 and is on pace for a large increase this year. Despite four years of withdrawals (and a fairly conservative asset allocation), NW was at an all-time high last week.
Yes it's been a good year(congratulations!). I will cautiously say that I think next year may be rewarding too :wink: .
"Success is going from failure to failure without loss of enthusiasm." Winston Churchill.

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