The all-American working man demeanor of Tim Walz—Kamala Harris’s new running mate—looks like it’s not just an act.
Financial disclosures show Tim Walz barely has any assets to his name. No stocks, bonds, or even property to call his own. Together with his wife, Gwen, his net worth is $330,000, according to a report by the Wall Street Journal citing financial disclosures from 2019, the year after he became Minnesota governor.
With that kind of meager nest egg, he would be more or less in line with the median figure for Americans his age (he’s 60), and even poorer than the average. One in 15 Americans is a millionaire, a recent UBS wealth report discovered.
Meanwhile, the gross annual income of Walz and his wife, Gwen, amounted to $166,719 before tax in 2022, according to their joint return filed that same year. Walz is even entitled to earn more than the $127,629 salary he receives as state governor, but he has elected not to receive the roughly $22,000 difference.
“Walz represents the stable middle class,” tax lawyer Megan Gorman, who authored a book on the personal finances of U.S. presidents, told the paper.
Nothing is the issue. I don’t want something extra. I’m trying to gain understanding through conversation. Repeating to me that income isn’t part of net worth doesn’t help me understand. I have done some quick reading and it appears you can indeed include your pension in your net worth calculations. It isn’t necessarily just income. Seems different financial advisors handle pensions differently. Just like with a house. Some will include the value of a house in net worth, some won’t because the value of the home is not liquid.
Either way that wasn’t my original point. My original point was that the upper comment never said that including pension in net worth would turn him into a billionaire. And I was also trying to make the point that a complete picture should be provided so that some people do not simply dismiss the article entirely for one missing detail (as people will and often do use any excuse they can to change their mind).
I hope that clears my position a little. I’m not trying to argue despite what you and others might think.
What is unclear that you would like someone to explain? That’s probably a more productive question on my part.
I guess I’m just surprised that so many people don’t view a pension as an asset and only view it as income. After the conversations here I did some reading and it looks like there’s not a consensus on whether to include a pension in net worth calculations. That being said there isn’t a consensus about including home value in net worth calculations either.
I suppose my question would be how do you define net worth? Would you agree with the other user who seems to define it as assets that can be left to survivors minus debt?
I have always thought of net worth as total assets minus total obligations/debts and would view a pension as an asset.
It’s viewed as income because it’s income. It comes in 1-2 times a month as a relatively modest salary. It’s not an asset because you don’t have it in your possession. You can’t use it or leverage it in its entirety, to treat it as your asset would be wildly unfair and inaccurate as it can be taken away before it has paid out - that can’t happen with an asset. There are ways to lose your pension. If you give me stocks or money into my account you can’t take it back barring criminal action or a civil court ruling related to it.
Your description of net worth is correct but pensions are not an asset. View it how you want, legally it is not an asset and it isn’t treated as one. Every year you’re getting a fraction of it, and that fraction is further spread out over 12 or 24 installments, and you can potentially lose the remainder. That’s not an asset any more than your current job is.
TL;DR: a pension is a job you get paid to do but you don’t actually have to go to work.
Can you provide a source corroborating “legally it is not an asset?”
Here’s a source with case precedent that contradicts that in Massachusetts (appeals court vacated a decision to consider a pension as income): https://www.fitchlp.com/blog/2021/11/should-a-pension-be-considered-an-asset-or-a-source-of-income/
So this might be a thing that varies from State to State. And it might also depend upon the type of pension. Some pensions you can take a lump sum. It’s not always a fixed income as you stated. It sounds like you might know more than me on this subject, but I’m not finding separate resources that fully agree with you. Most sources seem to indicate it could be considered an asset or it could be considered income.
If you take a pension as a lump sum then yes it is an asset because the entirety of it is in your possession. They did not do that, so it’s not an asset/part of their net worth. It’s not in their possession.
I have explained this a dozen different ways. Your definitions do not matter. It is a source of income which is explicitly listed in this article. Your income is not an asset until the money from the income is in your possession. The income stream is not a part of your net worth. Your take home pay from work is not an asset. Social security is not an asset. Pensions paying out over time are not an asset. Cash in your account is an asset. Retirement accounts are an asset. Your vehicle or home (if you own part of them or outright) are assets.
Ask any American accountant.
I missed this commment. Sorry. Also, I have talked to accountants and financial advisors that work with our union. I think because a lump sum is an option they all treat it as an asset when discussing net worth.
And I’ve mentioned several times that I understand income is not an asset. I have also mentioned several times that the pension was treated by other professional financial advisors and accountants as an asset (probably due to the lump sum option). I’m sure its treated differently if they don’t take the lump sum.
I get that if you are drawing on a pension and didn’t take the lump sum that it would be income and thus not an asset. What isn’t so clear to me is whether a pension that you are not drawing on yet but offers an option of a lump sum can be considered an asset for the purposes of calculating net worth.
Edit: I appreciate you taking the time to explain some of this. Might I suggest though that you take a little more care in how you talk to people? You’re coming off very rude. Maybe that’s just me reading into what you’re saying, but if someone spoke to me like this in person or via email, I’d walk away.
Re: your article which you clearly skimmed
They are making a functional argument that does not change the fact that pensions are treated as income, but instead arguing in this case it hurts the aggrieved party by cutting them off from something they are entitled to and even goes so far as to say the lower court ruling was not incorrect. A single narrow lane case that doesn’t undo decades of laws governing accounting and finances is not good enough.
So now you’re back to saying that it is a legal definition. You’re confusing me more. You initially said pensions are legally defined as income. Then you said that legal wasn’t the right word and even edited that out of your comment. Now you’re back to saying there’s decades of laws. If you don’t know whether it’s legally defined as income then how am I supposed to know it?
Everything I’m finding online seems to indicate it can be viewed one way or another depending upon opinion and whether a lump sum option is available. You seem to be saying its always income? You haven’t clarified the lump sum option and how a pension with that option should be viewed from your opinion. And from an, albeit quick, look online I can’t find legal resources that indicate it is a hard rule. Even the link I provided and even the details you highlighted from that do not say its always a hard rule that all pensions are always income and never an asset.
I know one case doesn’t change decades of laws, but I can’t easily find these decades of laws and accounting rules. Most of what I’m finding when trying to look talks about the accounting for managing the pension itself and the assets of the pension which obviously doesn’t answer the question at hand.
So all of that said, do you have a resource you can point me to in order to help educate myself in the legal and accounting rules for how to treat pensions for individual finance and not something from the corporate finance side? Not that I don’t trust you, but we are both strangers on the internet after all.
I’m done man. You can keep making up your own rules. Have fun with the IRS. Everyone else gets this but you. At some point you need to go read about this and stop arguing in favor of a wrong position you don’t even understand.
Here’s your source stop being lazy.
It is taxed as income
Yeah…that doesn’t answer my question. That only answers how the IRS treats income from the pension.
You can derive income from assets can you not? Am I misunderstanding assets? I would view rental property as an asset and you can get income from that. I would view a 401k as an asset and you can get income from that.
If I say I’m worth $500k more because of my pension. How does that have anything to do with the IRS?