Net worth calculation with a pension as opposed to a 401k?


#41

I don’t know if this will help but as another pensioner, this is how I compare it.

We all track net worth, then use the 4% rule to let us know a rough estimate for what we can spend per year (cash flow).

So, I track

  1. The amount that I have already earned in my pension.
  2. The net worth of my other investments that. Note: I discount my pretax investments by 15% for taxes and exclude things like cars and houses for my 4% rule.

Then I add to two together to see where I am at.

  1. My pension is currently 700 per month
  2. My investments are currently 430 per month.

Nobody has a crystal ball, so remember that these numbers are all live and can change day to day.

Hope this helps.


#42

People with pensions vs. people without will be the haves vs. the have-nots of the retirement age demographic within the next couple of decades.


#43

Being in Australia and reading about 401k’s is interesting.
In Australia we have a 9.5% compulsory contribution to our Superannuation or Pension fund or whatever you want to call it. This 9.5% comes out of our personal wages, it’s not a contribution by the company we work for.
For example, if I earn $60,000 gross per year, my actual taxable income is $54,794 as $5,205 is actually taken out an placed into my super/pension fund which I cannot access until I’m 65. Essentially a compulsory retirement/pension saving fund.
In contrast to this, when I was working in the UK, the company contributed 3% of wages to your pension fund. This was not taken from my wages. They also had a scheme where for every 1% that I contribute over the 3% the company will contribute up to a maximum of 4%. So, if I contributed the full 4% the company will add another 4%, plus the initial 3% for a total of 11%, essentially giving me 7% ‘free money’. I cant access this until I’m 65, however there is another added complication being that I cant transfer this money to my Australian pension fund until I’m 65.
If someone is willing to give you ‘free money’ I’d be taking up that offer.
I hope that this all makes sense and I have understood 401k’s, but if not then my apologies.
I think I’ll stick to property :slight_smile: