A Socio economic discussion about boomers.

[SoonerAviator]

I can't speak to whether or not the new dorms are overbuilt or overly expensive, but remember that there are a lot of situations where it's cheaper/more effective to tear down an older building than to renovate it. Walker and Couch, for example, had mold problems and Adams had been empty because a burst pipe damaged the building beyond economic repair.

I do agree that there's always a question about whether it's better to repair or replace. I do have a hard time believing that solving a mold problem was going to cost more than demolishing and building a whole new complex. However, capitalization/tax rules help sway some decisions when you can amortize out the expense across the useful life. Not to mention that they get to charge even higher prices for nice, new/fancy student living areas.

 

[SoonerAviator]

As an aside, does anyone waterski anymore? When I got away from waterskiing in the early 90s, wakeboards were just showing up. Last time I was at a lake, it looked like 100% were wakeboarding, no skis at all.

I do, and I started teaching my nieces how to ski this past summer. I started slalom skiing around 8/9 yrs old but have never run a slalom course, but I ski on a newer mid-level ski (69 HO Triumph w/Double Animal boots). I always loved slalom skiing more than tubing or knee-boarding. Tried wakeboarding once but wasn't really that thrilled with it (although our 20' runabout doesn't really make much of a wake). My daughter wants to learn to ski next summer, so we'll see how that goes. We are looking to upgrade to a newer boat here in a few years (2005 Cobalt 272) which has a SS arch with wakeboard tow eye, so we'll see if the kids want to wakeboard with that. I'm not spending $150K to make waves though, lol.

 

[Bill]

Wakeboard boats are horrible, they make the lake unusable for smaller craft, erode shoreline, and tear up docks and other on water structures.

 

[SoonerAviator]

Wakeboard boats are horrible, they make the lake unusable for smaller craft, erode shoreline, and tear up docks and other on water structures.

Eh, unless they're running near the docks or shoreline, I doubt it's any different than a cruiser running down the lake. They all push decent size wakes with that much of the stern in the water. I DO think that the typical wakeboard boat operator tends to disregard lake rules and common courtesy though, similar to many jet ski owners. This ends up ****ing people off around them, but rarely is it doing real damage.

 

[hindsight2020]

Not a boater here, but I believe there was some substantive biomarine damage being done underwater by the churn, depending on the depth of the lakes in question. This was mostly a fight coming from the sport/recreational fishermen who share the space iirc.

 

[MIFlyer]

A Socio economic discussion about boomers.
Disclaimer I’m a boomer. But a late one. So right now, boomers are buying stuff and spending money. The southeast and southwest of seeing a flood of baby boomers buying houses, buying boats, buying airplanes. The oldest of the boomers are pushing 80. As time goes by they will not be able to fly those airplanes, run the boats, and will need to move into assisted living or get buried. Currently, my wife and I are helping my pre-boomer father and mother-in-law transition into an assisted living situation.
It made me wonder about how things might unfold in the next 10 to 15 years as the largest generation in history gets to their twilight years. My 24 yr. old daughter is concerned that when she finishes her school and military obligation that she won’t be able to afford a house. I can understand her point of you when in the Raleigh area vinyl boxes in a bean field are going for north of $400,000. But my advice to her was not to worry as a lot of these retired boomers are going to be selling, putting a deflationary pressure on the price of housing. And that being a physician she will always be in the top tier of wage earners.
So what do you all think?

I'm torn. On one hand, there is a lot of information that says as the boomers let go of homes, starting in around 2030, there might be some price relaxation due to increased supply. That said, the population of the country has grown so much due to immigration over the last 30 years that we're a long way from not having a housing shortage, and as the rich get richer, more people will own multiple homes and more will have no owned home.

I'm fairly bullish on RE, especially if you look at what that town/area might look like in 20 years. suburbs near nice cities in NC seem like the kind of places my generation (X) will want to start going around the time the boomers die off, so while there may be towns/areas that go down, I think desirable ones will continue up.

Also, with inflation being fairly persistent now, the odds say that houses will continue to be more expensive in nominal dollars.

She's a doctor, as soon as she knows where she wants to live, she should buy a house (post residency?). Every self made millionaire I know made it with a significant part of their wealth being from buying and paying off real estate.

 

[Fiveslide]

Eh, unless they're running near the docks or shoreline, I doubt it's any different than a cruiser running down the lake. They all push decent size wakes with that much of the stern in the water. I DO think that the typical wakeboard boat operator tends to disregard lake rules and common courtesy though, similar to many jet ski owners. This ends up ****ing people off around them, but rarely is it doing real damage.

The newer, more advanced boats, absolutely produce a wake 2 to 4 times bigger than a typical boat. I did it behind the top Malibu model recently, first time I wakeboarded in nearly 20 years. I told them to turn the wake down because it was just bigger than my skills could handle. They beat the snot out docks and boats tied to them.

And, yes, that is the problem, they want do it where they want to do it, usually where people live. The people that live there had better learn to tie there boat in a way that it won't get beat up, because nobody is going to convince a wakeboarder to go somewhere else to do their thing. I give them crappy looks, might flip them off, but in the end I just make sure I have enough fenders and the boat or jetski is tied so it doesn't hit the dock. Like I said, I have older stuff, the new was worn off my watercraft long ago. I just care that they run good, and run when I need them to.

If I ever had a big financial windfall, I'd probably buy myself a big ol' wakeboat and become part of the problem, lol.

 

[Half Fast]

Every self made millionaire I know made it with a significant part of their wealth being from buying and paying off real estate.

You need to meet more people.

 

[172andyou]

You need to meet more people.

How about it. I know a family that had the good sense to inherit an absolutely massive ranch (hundreds of thousands of acres) and that's how they became millionaires. I literally don't know a single other wealthy person that made their wealth via land.

 

[SoonerAviator]

The newer, more advanced boats, absolutely produce a wake 2 to 4 times bigger than a typical boat. I did it behind the top Malibu model recently, first time I wakeboarded in nearly 20 years. I told them to turn the wake down because it was just bigger than my skills could handle. They beat the snot out docks and boats tied to them.

And, yes, that is the problem, they want do it where they want to do it, usually where people live. The people that live there had better learn to tie there boat in a way that it won't get beat up, because nobody is going to convince a wakeboarder to go somewhere else to do their thing. I give them crappy looks, might flip them off, but in the end I just make sure I have enough fenders and the boat or jetski is tied so it doesn't hit the dock. Like I said, I have older stuff, the new was worn off my watercraft long ago. I just care that they run good, and run when I need them to.

If I ever had a big financial windfall, I'd probably buy myself a big ol' wakeboat and become part of the problem, lol.

I wasn't implying they don't produce a big wake. I've seen many of them doing their thing when they have automated ballast systems capable of bringing 1,000s of pounds in water ballast aboard, although they typically do more of that while wake surfing, not wake boarding.

As far as how big the wake is, I boat on a decent size lake with 40+' ocean cruisers displacing 30K+ lbs. They all throw huge wakes and can send smaller boats and docks on a roller coaster. The main difference is that most of those bigger cruisers are at idle speed near shore, so the big wakes have a bit of time to break up when they start out in the main channels. The wake surfing guys are plowing along up and down the shoreline with the 12-speaker audio system cranked up for the whole cove to hear, lol.

 

[Oldmanb777]

How about it. I know a family that had the good sense to inherit an absolutely massive ranch (hundreds of thousands of acres) and that's how they became millionaires. I literally don't know a single other wealthy person that made their wealth via land.

I know a few that are land rich and extremely cash poor. They are dedicated to the land they own. More than a family business. The ones I know have second jobs to suplement in bad times. One of those has 357,000 acres, and has a second job. I hunt their property some years. They never have owned a new car, or truck.

 

[Fiveslide]

I wasn't implying they don't produce a big wake. I've seen many of them doing their thing when they have automated ballast systems capable of bringing 1,000s of pounds in water ballast aboard, although they typically do more of that while wake surfing, not wake boarding.

As far as how big the wake is, I boat on a decent size lake with 40+' ocean cruisers displacing 30K+ lbs. They all throw huge wakes and can send smaller boats and docks on a roller coaster. The main difference is that most of those bigger cruisers are at idle speed near shore, so the big wakes have a bit of time to break up when they start out in the main channels. The wake surfing guys are plowing along up and down the shoreline with the 12-speaker audio system cranked up for the whole cove to hear, lol.

Oh, yeah, we have a few big boats here, but you rarely see them away from the dock. When you do, they're pretty much motoring in the main channels or anchored in cove looking for peace and quiet. 99% of the boats here are less than 26'. We have 800 miles of shoreline, much of it undeveloped. They could find a place to wakesurf that didn't damage docks and boats, but most won't.

 

[Bob Noel]

How about it. I know a family that had the good sense to inherit an absolutely massive ranch (hundreds of thousands of acres) and that's how they became millionaires. I literally don't know a single other wealthy person that made their wealth via land.

I really don't know how wealthy people acquired their wealth. I'm not that curious (I'm not impying anything negative about anyone else). Oh, sure, there are some famous instances. But of the people I know personally, nope, I don't know how their wealth was acquired.

and, of course, the definition of "wealthy" and "millionaire" is kind of important.

 

[Half Fast]

and, of course, the definition of "wealthy" and "millionaire" is kind of important.

Well, the definition of the latter is rather simple: someone having a net worth of at least $1,000,000. The former is a question of perspective. Many people in the world would consider all Americans to be wealthy. Bezos and Musk probably don’t consider someone with $10M to be wealthy.

A useful POA definition might be that if you can afford to buy an airplane then you’re wealthy, whereas if you have bought an airplane you’ll soon be a pauper.

 

[JackL-3J]

I'm torn. On one hand, . . ..

Nature abhorrs a vacuum, as a system it will rebalance. There is no guarantee that in rebalanced the individual must survive. But neither is there a reason an individual cannot thrive by adapting to new realities.

 

[JackL-3J]

Well, the definition of the latter is rather simple: someone having a net worth of at least $1,000,000 . . .

Ah, but there were quite a few 26,000aires when Dad was born, and lots of 102,000aires in the year of my birth. As Yogi said, a quarter ain't worth a nickel anymore.

 

[tspear]

A useful POA definition might be that if you can afford to buy an airplane then you’re wealthy, whereas if you have bought an airplane you’ll soon be a pauper.

Well played

 

[172andyou]

Well, the definition of the latter is rather simple: someone having a net worth of at least $1,000,000. The former is a question of perspective.

I realized a while back that, for me, the definitions were about work.

Poverty: You are working a job, but don't make enough to pay all your bills and just get further behind.
Poor: Your job can pay your bills, but there is never anything left over and when you get sick you lay in bed wide awake because you don't know how you're going to pay your rent thanks to missing a couple days of work.
Middle class: You and your spouse work to pay your bills and you have enough left over to save some for retirement and take an occasional vacation.
Upper middle class: You work, but if your spouse works it's optional. Your retirement is funded and your kids can afford to go to college.
Wealthy: If you work, it's "for the love of the game" and otherwise you have enough money to never work again.

 

[Half Fast]

I realized a while back that, for me, the definitions were about work.

Poverty: You are working a job, but don't make enough to pay all your bills and just get further behind. Me when I was in college, working part time, taking out student loans, using scholarships, and getting some help from mom and dad.
Poor: Your job can pay your bills, but there is never anything left over and when you get sick you lay in bed wide awake because you don't know how you're going to pay your rent thanks to missing a couple days of work. Me for the first year or so after graduating college.
Middle class: You and your spouse work to pay your bills and you have enough left over to save some for retirement and take an occasional vacation. Me, early career and early marriage with a young family.
Upper middle class: You work, but if your spouse works it's optional. Your retirement is funded and your kids can afford to go to college. Me through the latter 3/4 of my career.
Wealthy: If you work, it's "for the love of the game" and otherwise you have enough money to never work again. Me today, retired early and loving it.

I'll note that those aren't static conditions, and most of us progress through them as we go through life. See my comments above.

 

[Bob Noel]

Well, the definition of the latter is rather simple: someone having a net worth of at least $1,000,000.

Then a lot of people are millionaires because of their homes, rather, the real estate prices have blown up so much that they've become millionaires just sitting on that house originally purchased for less than $100,000. I realize this isn't true everywhere (Rome NY comes to mind)

 

[Baked Potato]

Then a lot of people are millionaires because of their homes, rather, the real estate prices have blown up so much that they've become millionaires just sitting on that house originally purchased for less than $100,000. I realize this isn't true everywhere (Rome NY comes to mind)

Sure, but very illiquid millionaires! Even after the conversion of dwelling to dinero, one still must find a place with which to sleep at night. The increase in value they benefit from during the sale now works against them when on the other side of the table.

Of course there's always the option to pack up your winnings, cartoon-style, in burlap sacks labeled with dollar signs and jet off to live like a king somewhere like Thailand, or West Virginia.

 

[rwellner98]

Of course there's always the option to pack up your winnings, cartoon-style, in burlap sacks labeled with dollar signs and jet off to live like a king somewhere like Thailand, or West Virginia.

That's basically what I did. Lowered my cost of living in Mexico for 12 years. Came back to the US in 2024 for family reasons.

My son spent a year in Thailand and loved it. I'll be back in Mexico at some point for sure. Like it way better than the US for most things, aviation unfortunately being one of the things that's much better in the US.

 

[DaleB]

I've read that there are at least three different "net worth" numbers...

Net worth, all in, the big number
Net worth, excluding your primary residence (but can include other property, rentals, vacation homes, etc.)
Liquid net worth -- which means, as I understand/use it, how much actual cash could you lay your hands on in a relatively short period of time?

 

[TCABM]

I've read that there are at least three different "net worth" numbers...

Net worth is value of total assets minus value of total liabilities. That’s the common and in practice use of the term.

Liquid net worth is a subset of net worth, calculator as illiquid assets backed out of net worth. There is a definition for illiquid assets.

Being able to cash flow the payment on a $1M house doesn’t mean you have a $1M net worth.

 

[172andyou]

Being able to cash flow the payment on a $1M house doesn’t mean you have a $1M net worth.

True. But most of the messages on this thread at about people who bought a 150K house that is now worth a million. Those people do have a million net worth because they are either in the final days of their old-ass mortgage or have completely paid it off a long time ago.

 

[MIFlyer]

I've read that there are at least three different "net worth" numbers...

Net worth, all in, the big number
Net worth, excluding your primary residence (but can include other property, rentals, vacation homes, etc.)
Liquid net worth -- which means, as I understand/use it, how much actual cash could you lay your hands on in a relatively short period of time?

the second is the most true number. The third is dumb. No one with wealth has vast stacks of cash sitting around losing to inflation. Money must be "put to work" and that is one of the key learnings of building wealth. Make money work for you more than you work for money.

 

[Baked Potato]

the second is the most true number. The third is dumb. No one with wealth has vast stacks of cash sitting around losing to inflation. Money must be "put to work" and that is one of the key learnings of building wealth. Make money work for you more than you work for money.

"In a relatively short period of time"

I can't get cash from my brokerage account instantly - it takes a couple of days. I still count that as pretty liquid, unlike houses, airplanes, or bricks of high-grade Columbian cocaine that you happen to be holding for a friend.

 

[TCABM]

the second is the most true number. The third is dumb. No one with wealth has vast stacks of cash sitting around losing to inflation. Money must be "put to work" and that is one of the key learnings of building wealth. Make money work for you more than you work for money.

Liquid net worth is cash and cash equivalents. Illiquid assets are things that are difficult to convert to cash in a short period of time while retaining their value. Generally that’s real estate and qualified accounts.

Theoretically, you could take a distribution for a qualified account even if you’re not eligible to but the tax haircut would be around 25% or more, so the value isn’t retained.

Same with real estate. Wanting to sell that house quick usually requires discounting the price enough that you likely won’t derive it’s full value.

ETA: in the example you quoted, both the second and third scenario contain liquid and illiquid assets; the middle one does is excluding the net value of primary home from net worth.

 

[Half Fast]

I've read that there are at least three different "net worth" numbers...

Net worth, all in, the big number
Net worth, excluding your primary residence (but can include other property, rentals, vacation homes, etc.)
Liquid net worth -- which means, as I understand/use it, how much actual cash could you lay your hands on in a relatively short period of time?

I’d also differentiate between transferable and non-transferable net worth. For practical purposes, my pension is part of my net worth and can be thought of much like an annuity that’s providing income, but it can’t be gifted or inherited.

 

[GaryM]

How about it. I know a family that had the good sense to inherit an absolutely massive ranch (hundreds of thousands of acres) and that's how they became millionaires. I literally don't know a single other wealthy person that made their wealth via land.

I know a LOT of such people, because I grew up in farm country. Depending on where located, it doesn't take a ton of land to be worth $1MM. 100 acres can do it. 1000 acres usually will cross the threshold. There are an enormous number of farmers with net worths north of $1MM; they just happen to be working their asses off for a yearly income that some years is ok, and other years won't cover their cost of production.

 

[DaleB]

the second is the most true number. The third is dumb. No one with wealth has vast stacks of cash sitting around losing to inflation. Money must be "put to work" and that is one of the key learnings of building wealth. Make money work for you more than you work for money.

Not at all dumb. I've got money in brokerage accounts that I could liquidate and have in cash within minutes, or worst case a few days. Should that not count as liquid? By definition it is.

I think the first and second numbers (net worth and net worth excluding primary residence) both have some value. Whether the first or second has the most value to you depends on your plans around selling your house.

Liquid net worth is cash and cash equivalents. Illiquid assets are things that are difficult to convert to cash in a short period of time while retaining their value. Generally that’s real estate and qualified accounts.

Theoretically, you could take a distribution for a qualified account even if you’re not eligible to but the tax haircut would be around 25% or more, so the value isn’t retained.

I just adjust those numbers for the tax hit. Got money in an IRA? Great, you'll take a tax hit if you cash it all out. That amount is relatively simple to calculate.

The picture changes substantially as you get older. Once you pass 59-1/2, you only need to worry about the tax hit if you liquidate an IRA or 401(k).

In the end, keeping track of my net worth is just an interesting exercise. The only time anyone asks is when we're starting up with a new financial institution and they want to determine how far along the spectrum of "Don't care" to "Extreme ass kissing" they're going to put us. For me, it's just one aspect of the scorecard of how well or poorly I'm doing at managing our assets.

 

[TCABM]

….
I just adjust those numbers for the tax hit. Got money in an IRA? Great, you'll take a tax hit if you cash it all out. That amount is relatively simple to calculate. ….

Pre-59 1/2, there’s also the IRS penalty.

…. Once you pass 59-1/2, you only need to worry about the tax hit if you liquidate an IRA or 401(k)….

It can be more complex than that, but income drives tax and that’s results in individualized advice.

 

[MIFlyer]

You need to meet more people.

LOL, I was going to get all offended, then I remembered you are an engineer and took my chitchat statement quite literally. I agree that you don't have to pay off a house to be a millionair, but the vast majority I know either are there, or are on their way there.

Good study here https://www.ramseysolutions.com/retirement/the-national-study-of-millionaires-research To the point, I know people in several different towns worth anywhere for -10K (the worst kind of broke) to + 400M in net worth. The ones I know without a paid for house, but worth >$1M by my estimation include

1. The $400M guy. He doesn't care if his personal house is paid for or not, he's continuing to borrow and invest for more projects and doesn't lose sleep over what hting is paid off vs leveraged.
2. A few very high income couples (think both doctors) who due to moving don't currently own, but their 401ks are probably in the single millions

Also, I know LOTS of people with <$1M net worth, and they fall into a mix of paid off house or not. The ones with paid off houses fare much better in retirement than those renting or making payments.

 

[MIFlyer]

Not at all dumb. I've got money in brokerage accounts that I could liquidate and have in cash within minutes, or worst case a few days. Should that not count as liquid? By definition it is.

I think the first and second numbers (net worth and net worth excluding primary residence) both have some value. Whether the first or second has the most value to you depends on your plans around selling your house.


I just adjust those numbers for the tax hit. Got money in an IRA? Great, you'll take a tax hit if you cash it all out. That amount is relatively simple to calculate.

The picture changes substantially as you get older. Once you pass 59-1/2, you only need to worry about the tax hit if you liquidate an IRA or 401(k).

In the end, keeping track of my net worth is just an interesting exercise. The only time anyone asks is when we're starting up with a new financial institution and they want to determine how far along the spectrum of "Don't care" to "Extreme ass kissing" they're going to put us. For me, it's just one aspect of the scorecard of how well or poorly I'm doing at managing our assets.

Yes, sorry, I was going on TCABMs interpretation. I agree that traded securities count as liquid and that's a fine place to invest, I just don't agree with having a bunch of cash sitting around.

 

[172andyou]

I know a LOT of such people, because I grew up in farm country. Depending on where located, it doesn't take a ton of land to be worth $1MM. 100 acres can do it. 1000 acres usually will cross the threshold. There are an enormous number of farmers with net worths north of $1MM; they just happen to be working their asses off for a yearly income that some years is ok, and other years won't cover their cost of production.

Yes, fair point. My example was also a farm. Well, a ranch, but close enough.

Also, I know LOTS of people with <$1M net worth, and they fall into a mix of paid off house or not. The ones with paid off houses fare much better in retirement than those renting or making payments.

All depends on the interest rate. If you can get a 2-3% mortgage (which was pretty easy to do pre-pandemic/global economic meltdown) then paying off your note instead of investing the money elsewhere didn't make much sense.

 

[flyingcheesehead]

Ugh. I was curious about the definitions of the generations as I was looking at something on this thread, and now I feel old/weird.

My kids are technically three generations younger than me! I'm GenX, my wife is a Millenial, our kids are Gen Alpha.

 

[TCABM]

Ugh. I was curious about the definitions of the generations as I was looking at something on this thread, and now I feel old/weird.

My kids are technically three generations younger than me! I'm GenX, my wife is a Millenial, our kids are Gen Alpha.

Mom/Dad are Silent Generation. Me/Wife are X. One kid is Millenial, one is Z. Five generations across.

 

[DaleB]

Pre-59 1/2, there’s also the IRS penalty.

Which is why I included the sentence immediately after it. In retrospect maybe out of order, but there nonetheless.

I always regarded the retirement accounts as something to be contributed to, but never touched under any circumstances (except one). I did find one specific scenario where taking a 401(k) loan was a good idea and worked out very well, but other than that specific scenario -- which we all hope never happens again -- there's a reason the advice is universally given not to do it. For every doomsday scenario that might involve casking in retirement accounts, I found either insurance or a change in strategy or lifestyle that would hopefully render it moot.

 

[kayoh190]

I'm on the young side of Gen X and my wife is a Millennial, and it's fascinating how differently we see our retirement targets. I'm significantly more conservative in what I'd like 'our number' to be, but to her credit I've been slowly coming around to her way of thinking.

 

[MIFlyer]

Yes, fair point. My example was also a farm. Well, a ranch, but close enough.


All depends on the interest rate. If you can get a 2-3% mortgage (which was pretty easy to do pre-pandemic/global economic meltdown) then paying off your note instead of investing the money elsewhere didn't make much sense.

I understand the math. The reality I've seen is that those in their 50's and beyond with paid off houses are faring better than those who don't, as a group.