Valuing Social Security as an Asset
Should we value social security as an asset in our FI number?
My friend Jesse Cramer (guest on the podcast next month) put together a compelling case that we not only should value social security in our FI calculations, but also roughly how much the value is based on the income stream.
(Hint: nearly $400,000 per person)
I think the vast majority of us pursuing FI are way too conservative when it comes to our safe withdrawal rates, not counting social security at all plus padding our annual expenses so our FI number is just a little “safer.”
This all adds up to working extra years needlessly.
Jesse’s article, ‘Valuing Social Security as an Asset in Your Retirement Plan’ is a quick read and hopefully helps you feel more comfortable including social security in your FI calculations.
What Recent Accomplishments Make You Feel Proud?
One of my favorite recent posts in the Facebook group came from community member Thichimy Sophie Nguyen, who asked:
“What recent accomplishments make you feel so proud?”
This was a subtle shift on my 1% wins question, and with over 170 comments, it definitely struck a chord with the community.
Too many amazing accomplishments to list here, but to whet your appetite:
· Ernest: “Donated my stem cells to a cancer patient.”
· Natalie: “Graduating from a Nurse Practitioner program in the next 8 weeks.”
· Jennie: “Becoming alcohol free 16 months ago!”
· Ella: “Hit my first double comma milestone in January! Then did a vacation to Florida to celebrate.”
Berkshire Event: Omaha Meetup
This is a little niche for the newsletter, but many of you are attending the Berkshire Hathaway annual meeting in Omaha, NE on May 4th.
If you’re in town, join us for a meetup!
Saturday May 4th at 4pm at Blatt Beer & Table – North Downtown (610 N 12th St, Omaha, NE 68102)
My Favorite Inexpensive T-Shirts
Here’s my annual update on one of the most frequent questions I get via email:
“Hey Brad, what are those inexpensive, high-quality t-shirts you’ve talked about on the show a few times?”
I shop at a Clothing Shop Online and they have the Next Level 6210 shirts for about $5.
This is seriously the highest quality t-shirt I’ve ever owned and it comes in 35+ colors and is unisex.
The Next Level 6200 is my second favorite shirt, and in general I find Next Level to be the best option for these types of shirts.
(In full disclosure, my new go-to daily shirt is the ‘Under Armour Men's Tech 2.0 Short-Sleeve T-Shirt,’ as it’s perfect for the gym and daily wear. At ~$20, it’s still quite reasonable, but can’t touch the Next Level 6210 for a high-quality, comfortable shirt at an unbeatable price)
ChooseFI Community Taking Action This Week
I'm a longtime listener and wanted to share one of my wins of the past 19 months. In September of 2022 my husband and I agreed that I would quit my job as a social worker for a local nonprofit to spend more time with our kids (6, 5 and 2 at the time). I rolled over my 401k from the fee riddled work plan into Charles Schwab.
I did my net worth update last week and realized that since leaving my accounts have grown by 130k! That is significantly higher than I ever earned working full time. It also shows the power of compound interest. So to all of the people in their twenties - stick with it. You will be amazed at what happens over time!
- Molly
My 1% better this week is finally ditching my financial advisor. I went from paying 1% per year for AUM to investing everything in VTI and the index fund available through my employer retirement account. I wish I would have done this sooner but was hesitant to have the awkward conversation and after reading 'The Simple Path to Wealth' I was motivated to finally make the switch.
- Keo
My 1% stems from a recent email newsletter from you. I was reading other's 1% and there was mention of savings interest rates. I realized I hadn't looked at mine recently to see what I was getting on my savings accounts. The rate my account has been getting is .30%!! I have multiple Capital One online savings accounts which have evolved through many companies over the past 20 years (including ING Direct and others).
When I went on the Capital One website- it stated the rate was over 4.3%. So I called and asked what was up and why my accounts didn't have that rate. They said that the interest rate was low because it was a carry-over account from when previous companies were absorbed. They then changed all of my accounts to the higher rate! Every little bit counts!
- Karen
My 1% is using credit card travel rewards to book 8 round trip flights to Florida from Arizona and two hotel rooms to use the night before we go on a Disney cruise with our kids and nanny! The cruise itself is quite a splurge, but we were able to splurge because we didn't have to pay for flights or the hotel! We also have "free" hotel stays when I take my daughter to California for a choir competition and for a Mother's Day overnight stay at a resort. All with travel rewards!
- Kamber
My 1% better this week is that I've made a decision to take a mini retirement quite soon--my job isn't letting me take leave, so I'm preparing to give my notice in the next few months!
- Aaron
My partner and I recently purchased a home through a loan assumption. Because of this, we now have a 2.25% interest rate, instead of the 7.5% rate we were anticipating being stuck with. We had actually decided to give up on the house hunt and continue renting until rates went down. Then we saw the listing for our house and the small print at the bottom of the listing that said "2.25% loan assumption available".
I had never heard of this so I did a lot of research and after a very long and complicated process, we closed on the house. The assumption process is challenging, but we pulled it off because we have followed ChooseFI for a few years now and live debt free with a high savings rate and excellent credit scores. Over the life of the loan we'll pay hundreds of thousands less thanks to the lessons we've learned in this podcast, and that money will go toward our early retirement instead. Thanks!!
- Jason
