Personal Capital, a digital wealth advisor with over 1.5 million users of its free financial tools, released its 2017 Affluent Investor report with some interesting data. I used to consult with them between 2013 – 2015 and have been using their tools to track my net worth since 2012.
The biggest surprise from one of its surveys is that folks with more than $500,000 in investable assets are most worried about a financially secure retirement. Think about that for a minute. With the median retirement savings for 56 – 61 year olds in America at only ~$20,000, Americans with 25X that amount cite financial security as their top worry!
With $500,000+ in investable assets alone, one can presume that most survey respondents have net worths in excess of $1,000,000. After all, about ~85% of the typical American’s net worth is tied up in their primary residence. Check out the survey results.
I bet most people in the world would consider having $500,000 in investable assets plus a home to be a financial life well done. Therefore, we can conclude that affluent investors have to be one of the most paranoid demographics around, especially since 38% said they are also worried about losing their wealth.
Why Are Affluent Investors So Paranoid?
Most of the people who’ve been able to amass over $500,000 in investable assets are probably older than 37, the median age in America. Therefore, one can postulate that these investors have lived through the housing crisis and maybe even the 2000 dotcom bubble with a significant amount of assets. They’ve seen their investments get slashed by a third within 12 months a couple of times. They know dozens of people who were let go from a job they needed and remained jobless or underemployed for years.
When you amass $500,000+ in investable assets, you naturally start getting paranoid about losing all your money that took years, if not decades to accumulate. That paranoia only tends to get worse the more money you have in risk assets. After all, it takes a 100% return to get back to even if you lose 50% of your money.
Once I accumulated over $1,000,000 in investable assets, it no longer seemed prudent to allocate all my money towards stocks. Instead, I began piling most of my money into real estate to diversify away from my 401k, my company stock, and my career in equities. Little did I truly realize my “diversification,” starting in 2003, was actually a 5X leverage concentrated bet on San Francisco real estate.
The irony with having very little to invest is that you simply don’t have much financial worry. Think back to how happy you were in high school, college, or the first few years after work. All you cared about was having a good time and maybe saving a little money on the side for a vacation or a new ride. Is it any wonder why so many of us were happier before the age of 35?
It was only until after I built some passive income and started this site did my investing paranoia begin to wane. Writing about your fears is a lot like speaking to a therapist who helps put things into perspective.
My Top Three Financial Concerns
1) Poor investment returns from my rental home proceeds. Although it’s been a relief to no longer manage a rental property that comes with a $23,000 a year annual tax bill, I know I’ll be disappointed with myself in 20 years when I revisit how cheap I sold it for. The only solution to minimizing disappointment is earning at least a 5% annual return on my proceeds that cause minimal worry. My hope is that real estate crowdfunding, the stock market, and the municipal bond market will provide such an outcome, but I’ll never know for sure.
2) A large decline in my online business. My online business is the main reason why I’m not concerned about being financially secure in retirement. The income generated from the business is a buffer to the passive income that is currently being used to provide for my family. But as I look into the future, I’m thinking of taking things down a notch to spend more time with my son and minimize happiness downturns. Less effort generally means less reward unless I can increase productivity. The creation of the FS iTunes channel is one way for me to buy time during the weeks I no longer want to write. It’s potentially a new revenue generator as I’ve already been offered two sponsorship proposals.
3) The financial well-being of my in-laws. My parents are thankfully financially secure due to their long careers in the US Foreign Service. They lead frugal lives with no debt, minimal expenses and have healthcare and pensions. My in-laws, however, are not as lucky. They are surviving OK, but I want them to be thriving at their age. I want to find a way to financially help them without offending their honor. This is a tricky subject that deserves a dedicated post.
Try Not To Let Wealth Get In The Way Of Happiness
The amount of financial worry six figure income earners and high net worth individuals have is quite a paradox. But paranoia helps investors accumulate more capital in their lifetimes than those who couldn’t give two poops about financial freedom. However, investing FOMO never allows folks to ever be satisfied with how much they have.
The key to being financially happy when you’re already doing well is to compare your current self to your past self and not to other people. If you can focus on your own progress, dare I say your happiness meter might jump up a point or two!
Recommendation To Build Wealth
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After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.
Interesting results.
I would assume the people with 25X the median retirement savings for 56 – 61 year olds cite being financially secure in retirement as their top worry as they:
– (1) are already more informed / focused on their retirement;
– (2) have more to lose; or,
– (3) might be concerned with their disposable income or some other measurement.
This could all depend on one’s definition of a secure retirement – not just a number.
Another interesting result is that some of the other worries listed can be a function of one another (one or multiple worries can contribute to or compound other worries).
**Related side bar: For those looking to find an engaging way to relax – and save money in retirement – consider playing StarCraft Broodwar. It’s been out for 20 years and recently got released again with updated graphics – it’s amazing. I’ve been playing it for 20 years and will likely be doing the same when I reach “formal” retirement age. (Plus many aspects of the game parallel the worries listed here and lessons learned can be applied.)
– Mike
I have two opposite fears:
1) Not having my money last due to unforeseen expenses.
2) Sacrificing too much of my time to make money and ending up with more than enough.
Finding the balance between the two is difficult.
I also struggle with #2. How much is “enough”? Am I missing out on fun because I’m saving too aggressively?
That’s a good point, Jake. One might have a different definition of fun or how one would would be allocating $$ if not saved. But it likely crosses many different minds.
Even for the $$ we are saving/investing (not considering what amount), we recently considered if we were allocating too much or too little in a specific account type (retirement vs. non-retirement, etc.).
I laughed because I think I have worried (not constantly) about every item on the list.
Sam, I’d love a dedicated post on your financial relationship with your in-laws. I think this is a tricky subject that many deal with.
I’d say at this time in my twenties I have concerns in only having one main stream of income and also in not being able to continue the frugality I currently live at.
I hope our blog can potentially change the income piece, and as a person with student debt it is challenging to make investments outside of my retirement accounts at this point..
Once I begin a family, although there will be two incomes, there is more to spend on and another person to compromise with. Not saying I haven’t found someone who wouldn’t compromise, just that it is a different perspective from making decisions on your own.
Thanks for sharing !
As another person in their twenties, I completely agree with both of those concerns. I am working toward generating multiple income streams so that I am not tied to a single job, but it’s tough to fully replace a steady income.
And I know that my current level of frugality is not sustainable (not that I’m living like a hermit or anything), for very similar reasons. It will be tough to compromise on financial decisions when I feel like I have been disciplined for so long. How do you plan on working with your significant other to maintain civility and not feel like you are giving up too much?
Just into my twenties, I have the same worry; the need for multiple income streams cannot be over stated.
I also worry about the financial security of my folks, given they are still fending for me and siblings to see us through school, have no saving yet aging so first.
Am hoping my investments in stocks grow with me
I’m in my mid 30’s and grappled with these concerns in my 20’s.
Keep dollar cost averaging into the stock market, buy a house, pay it down and put money into retirement. You will become financially secure (albeit perhaps not independent) by your early 30’s.
The poor just try to get from one day to the next. They don’t have much to lose, so they aren’t too concerned with a decline in their finances. They also assume that they will never improve and so they don’t work toward that. Thus, the opportunity cost of not maximizing gains also doesn’t enter their mind. They aren’t worried about the downside or the upside.
My girlfriend grew up like that, and it’s hard for her to break out of that mindset.
For me, the biggest worry is having paid too much in taxes, and holding too much cash for emergencies. Both of those are about the opportunity cost of missing out on even larger gains.
With the tax code so complicated and so many kinds of tax advantaged accounts, and rollovers and conversion ladders, I’m concerned that I’ll end paying way more in taxes than I could have, and that I’ll have plenty of money in tax advantages accounts, but won’t be able to access it when I’m ready to retire because I won’t be 59.5.
Can’t we also just go to a national sales tax like Florida? It would make things so much simpler.
Ah, but the good thing is, she has you now and you don’t sound poor.
Holding too much cash is a investing FOMO thing given we’re in a bull market. I felt it too, but I also felt the importance of more cash now that I’ve got another dependent. Further, I’ve got that Hawaiian dream house to save for!
Why not aggressively build your after-tax retirement account?
Always Work On Improving Cash Flow For Financial Independence
Yeah, after I bought my house, I had to replace the air conditioner in my house, I realized that if the air conditioner has to be replaced and the roof needs repairs, at the same time, what appears to be a large emergency fund, won’t seem so large. That’s not even factoring in a job issue. So, cash.
I am building an after tax account in addition to my 401k and Roth IRA. I figured with three different kinds of tax treatment, I can optimize withdrawals to minimize taxes. But it’s still not an exact science.
Hi G – great point on using the three account types to balance the future’s unknown tax landscape. We recently explored this point further, but Sam’s mentioning of building an after tax account is important.
We’re focusing a lot on allocating toward our capital accounts now as well.
At this point, I am more concerned with what a financial collapse would do to friends, family and society around me. Knowing my finances are in a good place allows for a restful sleep. Knowing most of the general public isn’t in the same fortunate situation causes worry. There is real value in spreading good personal finance information – here’s to hoping more people read your blog Sam.
The fear and apprehension is totally understandable. As a person who watched half his retirement account disappear in 2008, and took significant loses in 2000 the last 20 years have not produced any level of comfort. I also watched many of my co-workers have to delay their retirement, and fear the next bubble will put me in this same place. When you can start seeing the finish line, and have done all the right things from a saving standpoint it is hard to not be nervous.
Money was my greatest fear when I got out of prison after my friend died of a drug overdose. Fear. It drives human beings to accomplish amazing things, and pushes them to unnecessary madness every day. Without money when I got out of prison, I pictured myself starving, struggling to find a happy place to live, and quickly heading back to prison – a place I DID NOT want to return to.
I turned my fear into a drive that pushed me through every challenge I faced, and it worked for me. I’ve been out of prison for 5 years now, and have accumulated a $250,000 net worth, but I still feel that fear of failing every day. I fortunately use that fear to motivate and drive me to create a better, stronger, healthier life for myself. When I had $100K saved, I said I’d go easier on myself at $250K. Now that I have $250K, I tell myself I’ll breathe a little easier and enjoy it more at $500K. I am expecting I’ll be able to turn the fear off at $500K-$1 Million as my passive income streams can support my lifestyle at that point and I won’t have to worry about starving, or losing my beloved home at that point, but I don’t know if I will be able to simply turn the fear that has driven me for 15 years off at that point. I’ll just have to keep working, trying, and pushing myself and see what I find when I get there.
I would bet that the majority of folks who have successfully saved half a million live in expensive locations like NYC or the Bay Area— places where you have the opportunity to make the kind of money that allows you to save that much, but also where the cost of living is extremely high. And THAT’s why they’re paranoid.
Sure, there’s always the option to move somewhere cheaper in retirement, but they’re used to living in exciting, vibrant places with a lot of things to do and (in the case of the Bay Area) great weather. If you want to retain the option of remaining in such a place, or relocating somewhere with similar amenities, you realize you need beaucoup bucks to do it. Just like yourself, Sam— you are looking to head back to Hawaii for retirement, one of the few places even more expensive than SF.
It’s pretty hard to contemplate settling down in, say, Topeka once you’ve lived in SF or Honolulu. Sorta like the old WWI song: “How ya gonna keep ’em down on the farm after they’ve seen Paris?”
Never heard of that WWI song! Thanks for sharing. I think the folks in Topeka would object though! Since they might have it better than Flint.
Honolulu is about 20% cheaper than SF actually. Further, their property tax rate is 65% less! I’m excited.
FS, I was astounded to read that you were unaware of that 1936 WWI song, a big hit for many acts like Judy Garland and Eddie Cantor and The Brian Sisters. And then, I had to do an inventory of my own memory and think where I had actually heard it. I was born in 1960. Like EVERY kid of my vintage, we watched ‘Our Gang/Little Rascals’ three times a day on our indie TV station. And this is the ONLY place I have ever heard this song.
By my calculations, I have seen that episode over 50 times. Enjoy this 2:20 min. slice of b&w heaven! https://www.youtube.com/watch?v=gKMfnW_fjyE
Perhaps it was because I grew up overseas for the first 13 years of my life and missed out on a lot of Americana. Thanks for sharing! And the marketing maven might just be me ;)
;)
It might just be, the evidence indicates this is true!
Great point! I used to live a much tougher life than I do now with much less money, less freedom, more stress, and more worries (pre-college life living with my parents). I knew we were poor, but I was just used to being poor.
Now that hubby and I both work full-time, I live in a nicer house, a great country, and such. It’s hard for me to go back to those tough days. But I guess I’d re-adjust if I had to.
At this point, I’m most concern about the market downturn. Our portfolio is somewhat diverse, but it would still drops quite a bit when there is a downturn. I’m pretty sure it will be okay because we still have 20 years in the market. It won’t be fun to see all that paper money disappearing like in 2000/2007.
I’m worried about parents and in laws too. They are doing okay for the most part, but you can’t avoid declining health. It’s a tough family issue to deal with.
I never received this survey from PC. I wonder if retirement account is considered in their 500k+ cutoff. Anyway, in the Portfolio section of their site I’m above 500k. It’s possible that the survey came in the form of an email that was missed or they only give it to those that accept the PC consulting interview. Anyway, my largest fear would be blockchain or some other new technology coming along and wiping the current affluent out. The fear is pretty low though. No, I do not have a fear of not having enough for retirement. We’ll maybe if fear stated above were true. With current rules though the answer is no.
Another interesting post Sam. I actually didn’t find it surprising that ‘affluent’ investors are most concerned about their retirement/future, in fact, I think that’s exactly why they’re affluent in the first place. Happy holidays to you and your family!
I’m not much in the retirement not secure camp anymore but I think it’s probably different for younger folks with significant assets. At 36 I realize I have almost enough to be fi. If the bottom falls out of the market I won’t but I have as much as 29 years to actually reach fi, an in demand skill set, and even with a fifty percent hair cut a significant head start on most people. I did lose significant funds during the housing crisis but also learned if you have time to ride the storm it’ll return. I’d be more worried if I was already retired or in my 50s.
I know thousands of investors with at least $500K in investable assets. I don’t know any with a car like the one in the picture.
I think most of your readers would be surprised to learn just how similar the lives of millionaires and multi-millionaires are to their own.
Wow I had no idea the rich worry so much. I know some wealthy people can get depressed, but I didn’t expect them to worry about financially secure during retirement.
My biggest fear right now is that both hubby and I will lose our jobs. That motivates us to save more, stay frugal, and invest wisely.
I’m glad you started the podcast. I’ve seen so many people do audio versions of your posts. You should be the best person to tell your stories! :)
The thing is, $500k in assets really isn’t “rich.” At a 4% withdrawal rate that is only $20k/year in retirement income. Even if your house is completely paid off that isn’t a lot of money. Especially compared to the salary you were probably making before retirement to save that much money. Depending on the average age of the people in the survey, I would be worried too if I had $500k and was 50+ years old.
It’s at least $500K in investable assets.
I’d say $500K in investable assets + a paid off home is rich in retirement. You’ve got $20K using a 4% withdrawal rate + $40,000+ from Social Security for both of you. Given you don’t have to save for retirement, life is pretty good.
A lot of your audience is, like yourself, on the path to early retirement. (We’re certainly a much higher percentage than the general population.)
Most of us don’t expect to receive Social Security or Medicare benefits for twenty, thirty, or even forty years. Not to mention the likelihood of cuts these entitlement programs in the coming decades. So we look at things like “asset allocation in retirement” and “safe withdrawal rate” a little differently than someone who retires at age 65.
Have there been more than one doing an audio version of my posts? I’m only aware of one whom asked for my permission. Glad to have you as a listener!
My biggest worry is about asset allocation and future tax implications at this point in my life. My wife and I have saved and invested pretty well and are FI. I recently turned 60 and know that our portfolio is too aggressively invested and our deferred piece needs a plan to better manage future taxes. I’m in the process of putting together my own “Request for Proposal” around my wants and needs in a future investment and tax plan and starting to “interview” prospective retirement planners and then use my CPA to help me select the right set of advisors for us to work with.
This is a stressful process but I know I will sleep better once I’ve dealt with this transformation from accumulation to preservation.
I relate to this big time. Although I am not in this category because I do not come from family money I am making my way there. Without a major market set back I could fit this criteria as I enter my early 30s.
Each year it just seems like I actually become more worried as I find more success. It is uncharted territory for me so I have a lot of thoughts always running through my head.
1) As an inexperienced investor someone who has invested for less then a decade fits this description in my opinion. I keep having a feeling that a massive crash is around the corner, maybe that is just paranoia? Did you have this when you were in your 20’s and started to hit your stride?
2) I worry about a recession and job loss so I am doing everything in my power to stack money away now as my wife and I have a good income and are young.
3) I think I am a financial markets pessimist. As I earn more and hoard more I feel really bad that there are so many out there that will not have the opportunity to escape the rat race. You need a lot of factors to succeed in a plan and I feel like I wish there was more equality in the world. Hard for me to go to 3rd world countries and travel like a rich American while everyone is fighting to survive.
Haha at “I fear having spoiled kids”, preach it, me too! That’s only 31%? I would think that’s more of a worry, like at 50%.
The more we build, the more paranoid I get. It could just be a common trait of a good investor. It’s like in being in school. You get good grades but you don’t stop to think about that, it’s there, but you’re still studying for the exam test and the one after that etc.
Maybe I am unique, but my biggest worry is healthcare costs. If I do retire early, I’ll be on my own for health insurance and that market seems all messed up. But I guess with enough $$, it doesn’t really matter, but $2000/month for a family of 4 on a high deductible plan seems crazy, but it’s coming closer and closer with 10-20% increases every year.
Once you bake in $2,000/month for family health care costs, there should be no fear. Just reality that that is the cost.
Start a business. Make it a deductible expense.
I’m most concerned about another market downturn that affects multiple sectors like equities and real estate, as well as how much college is going to cost in the more distant future, that climate change will negatively affect our local economy and real estate values, and that if I hold on to too much cash, it will be eaten by inflation. I’m worried that in-laws will have a health problem that we’ll have to cover while raising a young family of our own. There are a lot of financial risks in the future that are not controllable, and it’s hard not to worry, even with over $500,000 in investable assets!
I agree with Dr. Remoulak: you get wealthy because you DO worry about your finances. People that don’t care about such things, don’t acquire wealth (unless they come about it through some windfall). This actually ties in with your comments about your parents and in-laws. My parents came to the U.S. shortly after WWII with hardly anything, worked hard, saved, spent frugally, invested wisely, and now live very comfortably. Is it coincidence that all three of their children were successful and retired early? My in-laws are very unsavvy financially, squandered their pension, and are now just scraping by. Is it coincidence that their two children also have little interest in investing and accumulating wealth? To what extent do you think financial acumen is acquired from your parents as you are growing up? Inheritances aside, have you seen any studies on how much one’s success is linked to that of one’s parents?
I think kids are going to look up to their parents and try to respect them by following that path if you are setting the example. However, many still don’t care under those circumstances. On the flip side of the equation growing up in a family that is not that well financially educated does not mean you are doomed. It is up to each individual to educate themselves. Very little was taught to me from family instead I was fortunate enough to use many of the resources we all have at our finger tips today. Anyone can go to a library good about finances and start grinding away.
I don’t know…my grandparents grew up during the Depression and under the subjugation of Jim Crow. In spite of everything they both managed to obtain degrees and professional jobs. Even though they could not get a mortgage from a bank and had to do a seller financed mortgage at more than twice the going interest rate for the time, they still paid off their mortgage early. Grandma and grandpa were excellent savers and investors. Their daughters on the hand…not so much. My parents are actually pretty clueless when it comes to money. They raised me and yet I became diligent with my finances.
I think it all depends on how you react to how you were raised. I didn’t want to be like my parents, two well educated professionals who always stressed about money. My grandparents wanted their children to not want for anything and in providing so well neglected to teach financial literacy.
All of that to say, who knows what makes each of us go in the direction we do. Yeah, parents have influence but often that influence makes children do the opposite.
Same here, my grandparents are “uneducated” farmers – they had 7 years and 4 years of school, respectively – which is not unheard of in my country and their time (pre – WW2). Still, they have a much better finance understanding and better savings than my parents which each went to good universities and had good careers but now they are retired with little savings. I and my sister on the other hand are way better with money than my parents, although we got no “training” from my parents at all, nor did we talked money with my grandparents, because they lived far from us. I guess finance literacy skipped a generation in my family.
I guess your biggest concern is when your son starts a family and u want him to have his own house in addition to a rented property cause it’s only going to get harder for the next generation. At least u still have another rental in the city and you’ll be dwelling on whether to let your sons family ocxupy it and give up the rental income or use the rental income for them to rent elsewhere for their ‘own’ place.
There’s always the inter generational household like your neighbors and many in the bay but then you’ll have to see if your daughter in law agrees to live with u old folks… Hahhaa do u really want to think that far? I don’t think you would have time to dwell on this if u were going into your old job everyday .
Wouldn’t he and his children have the ability to buy their own homes? That’s what I did, most people do and what most people have been doing since the beginning.
Did your parents pay for your place?
I worry about my health, which is unhealthy.
I worry about my time, which takes up time.
I worry about BART, which makes me Uber.
I don’t worry about my investments, which makes me happy.
It’s sad to say that what I really worry most about is women in my life. My partner, my sister, my mother, my cousin, my friends. Long before the harassment in the news, I think women have it tough with career, motherhood, married, single, children, appearance, social media, etc. I don’t know how they do it. How is it even possible to do all this?
Great comment. So logical and good you brought up the topic of women. With all that’s going on, this is good for women now in in the future. There will ultimately be some setbacks, but over the longer run, this movement is going to make a huge difference for female generations to come.
I definitely fear our money is going to run out. I also know this is irrational. As our passive income stream only covers about 65% at present of our annual budget I have a minor heart attack every time I have to take money out of the accounts.
However I also know that these are our most expensive times. In 10 years our kids will be out of college, we can downsize our house and we will have pensions kicking in. So as long as we don’t do anything stupid over the next few years I really shouldn’t worry.
We know plenty of people with bigger problems than ours so we should be thankful for what we have.
Fear of running out money during retirement is to me pretty high on list for majority of public. I say if one fully relies on passive income produced by good quality dividend paying companies, without taking any cut from sale of position itself, then that will be ideal to reach financial freedom.
Just my 2 cents.
Great post, keep up the good work. Happy Investing.
The Dividend Karma.
Interesting to read this post – I just paid off my house and used a bunch of cash for renovations (wood floors, interior/exterior paint, 5-hole putting green in place of my backyard lawn, etc…). Feeling very “cash poor” and very anxious about Xmas spending at the moment because my savings account is less than my tolerance threshold. I’ll have it built back up in a couple of months, but it brought back the panic of my 20’s and 30’s when I was in credit card debt and had zero savings. You would think the comfort of a $1M investment portfolio, a paid off house and a very nice six fig salary would ease that fear but it’s always there. Some things are just very deep. ;-)
Although I’m not “affluent” I can attest that taxes stress me out, just thinking about them in theory. I’m only in my early thirties but I’ve been burned a few times on my taxes and now do a rough tax return early on so I can determine whether I have to put money into a tax deferred savings account. I’m probably someone who could do with getting a accountant but I have issues giving up all the control over my taxes.
I just love working on my businesses and love making them stronger and stronger so paranoia is helping to provide great products and value for my customers.
I can sum up my leading financial concern in one line:
Stock Market Crash!
We’re in a bubble now. It’s going to pop!
I theorize the ways that the rich defend their $500,000 dollars worth of capital is different then how I would defend my $5 worth of capital. You mention that you diversified away from equities into real estate. Is diversifying their income stream to minimize risk the standard and socially acceptable way among the rich to defend their money and alleviate their financial worries?
Interesting that covering healthcare costs isn’t an option in the Personal Capital survey. We have over $500K in investable assets and my biggest concern is the rising cost of health insurance premiums and how much of my retirement budget that will ultimately take up. Which I guess would make me select “being financially secure in retirement”. I would love to see a follow up survey from Personal Capital on what makes those people worried – healthcare, market downturns early in retirement, etc.
My biggest worry is not having enough diversification in my asset portfolio. I’m trying to get there through business ownership and real estate, but I’m paranoid the bottom will fall out before I can get there.
I’m not at a half million in investable assets yet, so maybe I should still be in the Hakuna Matata phase, but my brain doesn’t work like that.
I also worry about my parents losing their pensions in retirement due to markets or budget cuts. My folks are two lifelong public sector workers who didn’t save much for retirement outside of their pension plans and Social Security. If anything happened to their retirement income it would likely fall to me to ensure their wellbeing.
I can relate to this even as someone in their mid-20s. It’s seeing everyone around you and competing with that average instead of the actual average.
These days I spend most of my time fretting I won’t retire by my deadline and wishing I had started saving back in high school. Also, how to minimize taxes as the tax bill is so complicated.
I haven’t asked my CPA yet, but I’m curious if you’ll still have to pay AMT if you’re an LLC? So essentially it’s a 21 percent cap, unless you make over the AMT amount? At the very least, the pass through clause is exciting! I’m sad about SALT though :/.
I like the last part the best; to compare yourself to yourself from the past rather than others. I suppose it also makes sense why older folks may worry about a market downturn, especially if they may be retired and are counting on their retirement assets to fund their life.
Instead of concerned, I would say I’m focused – most of the time :-) on channeling $$$ to retirement and after-tax accounts that can have the time to grow.
I do have all the listed worries to various extents. On top of that, one always have to work and plan to prevent the taxmen take their big cuts especially for a year like 2017 with the portfolio annual ROC up in the 45% range. Always have to bear in mind though a return like this is not typical and unusual. We are in the sandwich generation in which we are not poor but definitely not rich yet to retire and yet the income taxes (both federal and state) are killing us.
Sam – thanks for the great post. I was wondering if you might be able to share more about your experiences living with parents in the foreign service. Where did you live as a child (geographically)? Are you fluent in any other languages? What kinds of schools did you attend? It sounds like a remarkable childhood. I remember living in the Philippines as a three year old (military family), but this was the extent of my overseas experiences. I imagine that growing up overseas with new places every few years (assuming you moved around a lot) kept things fresh and interesting. I’d love to hear more on this. It would be interesting to see a blog post perhaps quantifying what it would cost to be able to do this for career professionals with a “normal job”. Thanks again.
Eric
It was a great adventure. Went to international schools in Taipei, Kuala Lumpur, Osaka, and Lusaka.
My Mandarin used to be pretty fluent. But now it is Rusty. It’s such a shame and I’d like to go live abroad in a Mandarin speaking country to get it back.
Hey Sam, you can get it back by watching TV Channel 26 in SF. I lived in Taipei and Kuala Lumpur before but I kept my Mandarin speaking by watching Chinese soap-opera on TV. As you may know, the more languages that you speak which help your memory in old age. Good Luck.
So funny you mention this because I have 26 episodes of some Korean drama dubbed in Mandarin that I am prepared to watch. Period dramas are the best! If you’ve ever watched winter sonata and this other one I forget.
I’m of two minds about this, but I’m not paranoid as downturns usually don’t last long. And yet…
As millions of Boomers (a generation that was given a planetful of resources and did very little with it – besides consume) retire, one wonders if the stock market will suffer a stagnation lasting for a decade or more as they cash out their 401k and Roth plans. As the demo pyramid becomes a cylinder, it will take a while until that sorts itself out. Likewise as they sell their expensive houses for smaller ones, one wonders who will buy them in twenty years as most millennials are broke and have limited prospects for the future due to systemic changes in the economy.
This is all depressing stuff, but given the low level of savings and investments among that generation, it’s possible that the selloff won’t be as dire or dramatic. It would be ironic if the lack of savings of the Boomers is what keeps the market from being flat or in a tail spin until 2035 or so.
Becoming wealthy does not eliminate worry. My wife and I have worked hard have been fortunate to have reached the upper 0.1% of income earners. We are retiring this year in our early 50’s but although we don’t worry much about money, we have shifted our worries to our kids futures(will they choose a partner wisely) and our own health. It’s certainly less stressful but the worries are part of the human condition.