Metaphysical question on meaning of "savings"

[scfr]

It's an interesting question. As I think about it I am coming to the realization that in the internal dialog I have with myself about money I refer to "retirement SAVINGS" vs. "----- FUNDS" with the latter being things such as: Emergency Fund, Car Fund, Vacation Fund, House Fund, etc. The only other thing I really internalized as SAVINGS was business start-up savings back when my husband wanted to quit his salaried job to start his own business. I don't know why I think of things this way, and I have no idea if it's the right or wrong approach.

I wonder if or how my thinking will change after retirement?

[feh]

If you really want to go down the rabbit hole, read these recent threads on bogleheads:

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=159671&start=100

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=156054

Most people over there seem to have a more generous definition of "savings" than my simple formula above.

[scfr]

If you really want to go down the rabbit hole, read these recent threads on bogleheads:

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=159671&start=100

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=156054

Most people over there seem to have a more generous definition of "savings" than my simple formula above.

I glanced at the 2nd one and decided NOT to go down the rabbit hole (closed my browser quick), but I do love that there are people in this world that like to think about and discuss things like that!

[scfr]

Ensuring that we retire with enough money is about 8th on our priority list, after multiple home repairs, auto repair, auto insurance for a teen boy, (used) car for the kids, help with college tuition, etc, etc.

Fortunately, all is not lost, since we have no CC debt, and $27K combined mortgage and auto balances, plus combined retirement balances above $360K.

It sounds like you are doing really quite well. Have you thought about letting yourself & your future security move up a little bit higher on the priority list, perhaps by letting retirement savings take precedence over a car for the kids?

[Nutria]

If you really want to go down the rabbit hole, read these recent threads on bogleheads:

https://www.bogleheads.org/forum/vie...9671&start=100

Someone doesn't know the difference between "equity" and "savings"!

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=156054

Most people over there seem to have a more generous definition of "savings" than my simple formula above.[/QUOTE]

But this guy has it right: https://www.bogleheads.org/forum/vie...56054#p2340764

[corn18]

A rule of thumb (ROT) is not a rule to be followed blindly by everyone. They are generally for the stupid people who can't figure it out on their own and need a place to start (I was in that demographic, so I know how it feels). You appear to be doing very well and have a savings plan that is working for you.

I am surprised no one has mentioned net wealth as the measure of savings. I put a LOT of money in the bank this year from my bonus. None of it is included in my net wealth calculation because it has a designated purpose and will be spent at some point in the next 4 years (college, vacation, car, EF, house repair, gifs, etc...). So I don't consider it wealth, I consider it payment for future expenses. The result of that approach is it looks like I save a lot but my net wealth is not increasing as quickly as I would like. I need to figure out how to make more or spend less, because the data show I can't retire until I am 67 and I'm not happy about that.

[Nutria]

A rule of thumb (ROT) is not a rule to be followed blindly by everyone. They are generally for the stupid people who can't figure it out on their own and need a place to start (I was in that demographic, so I know how it feels). You appear to be doing very well and have a savings plan that is working for you.

We were all there at one time...

I am surprised no one has mentioned net wealth as the measure of savings. I put a LOT of money in the bank this year from my bonus. None of it is included in my net wealth calculation because it has a designated purpose and will be spent at some point in the next 4 years (college, vacation, car, EF, house repair, gifs, etc...). So I don't consider it wealth, I consider it payment for future expenses. The result of that approach is it looks like I save a lot but my net wealth is not increasing as quickly as I would like. I need to figure out how to make more or spend less, because the data show I can't retire until I am 67 and I'm not happy about that.

I also have a net worth (different from net wealth?) spreadsheet.

Unlike you, I add in the non-retirement money that we save (medical, taxes, tuition, misc, etc) because the assets are there. Because of my need to be honest/realistic with myself, I also add as liabilities things like the known (or well approximateable) amounts of future spending on taxes & tuition.

But those future liabilities are all greater than the assets that will pay for them, my total net worth is dragged down. To me, though, that's ok, since it gives me a more realistic picture of my net worth.

(And since it's all in a spreadsheet on a big screen, I've got all sorts of other balances and percentages of just slices of the fiscal picture.)

[corn18]

We were all there at one time...



I also have a net worth (different from net wealth?) spreadsheet.

Unlike you, I add in the non-retirement money that we save (medical, taxes, tuition, misc, etc) because the assets are there. Because of my need to be honest/realistic with myself, I also add as liabilities things like the known (or well approximateable) amounts of future spending on taxes & tuition.

But those future liabilities are all greater than the assets that will pay for them, my total net worth is dragged down. To me, though, that's ok, since it gives me a more realistic picture of my net worth.

(And since it's all in a spreadsheet on a big screen, I've got all sorts of other balances and percentages of just slices of the fiscal picture.)

I like that idea. A lot. I think I will implement that approach to tracking my net worth/wealth as it has always bothered me that the spreadsheet never accounted for that huge chunk of money just sitting there. Will be interesting to see how putting the time phased full value of expected liabilities will look.

Do you put your EF in as an asset with no future liabilities against it? Or maybe just net it out with a liability equal to the EF.

Tom

[Nutria]

Do you put your EF in as an asset with no future liabilities against it? Or maybe just net it out with a liability equal to the EF.

I have multiple EFs:

• Job Loss,
• Medical (includes HSA and a savings acct), and
• General.

Hopefully, the JL EF will never get spent. The Medical & General balances fluctuate. Sometimes a little, and sometimes a lot. How much and by what frequency are one of Donald Rumsfeld's known unknowns. So, I just leave them as "naked" assets, and accept that they fluctuate. (Just like the balances of my investment accounts fluctuate.)
.