RSP was reduced by 30% to account for future taxes. (Assets are really at 128.4k) Cash isn't really cash but short term investments (1 year or less) collecting an avg of ~2.3%. This is for emergency funds and/or potential down payment on a home. Concidently, this fixed income % of my total assets is also roughly my age.Seems like the RRSP is gone
The cash holding seems high
Thanks. I'm now in my early 30s, so you are in better shape than I am. I think there are quite a few people out there that are financially responsible, they just don't talk about it or go on financial forums (if they do, they just don't post on it).Very cool, I love how you don't have any debt. Keep up the awesome progress. I am in my late 20's and have similar net worth. It's comforting to see other people around my age with similar financial mindset. Cheers.
As per Thomas Stanley, the author of Millionaire Next Door, your expected net worth should be 10% of your age times yearly income....(0.10 X age X income = expected net worth). Now you can check that if you are ahead of the game or not.Very cool, I love how you don't have any debt. Keep up the awesome progress. I am in my late 20's and have similar net worth. It's comforting to see other people around my age with similar financial mindset. Cheers.
Like Ponderling and Milhouse, I don't formally account for future tax liability.I've been thinking that this is no longer a true representation of net worth after tax. I have reduced my pension by 30% to account for future tax liability, but realize that my investments contains unrealized gains which would generate a future tax liability. This expected tax liability isn't too big at the moment though. Do people here usually reduce their holding's value to account for this?
Good point about that tax rate likely being lower in retirement. I am a bit hesitant about not reducing the pension size, because it would give the illusion that $100 in my pension is equivalent to $100 in my bank account, which isn't true.Like Ponderling and Milhouse, I don't formally account for future tax liability.
If you do wish to plan for it, I think your 30% figure is almost certainly too high.
I'm guessing that's your current marginal rate. In Ontario, that's consistent with a salary in the $50K-$90K range.
However, you should be using your average tax rate as a guide. In Ontario, the average tax rate on an income of $80,000 is 20.7% (says the TaxTips calculator). You only hit a 30% average tax rate at about $150K of income. That's a hell of a retirement!
Even the average rate may be high. I am in early retirement and taking advantage of several tax-saving opportunities -- eligible dividends, pension credit, optimizing capital gains. Our average tax rate has fallen dramatically from our working days.