Calculating Retirement Net Worth

Step 6 – Calculating Retirement Net Worth

Whew! We’re almost there. Step 6 is calculating your retirement net worth. Your retirement net worth gives you a picture of your assets minus your liabilities and debt = your net worth. Knowing where you’re at, is a big step in your financial literacy and your ability to feel secure in retirement. Knowledge is power!

For a retiree to generate $40,000 a year after stopping work, he or she will need savings of about $1.18 million to support a 30-year retirement.”

According to AARP

If you’re looking for a tool to help you calculate your net worth, download this FREE Net Worth Calculator!

Why should you calculate your net worth?  

  1. To get an Accurate Picture of your Overall Financial Health – Calculating your net worth can show you where your money is at. By having an idea of where your assets and liabilities are, you can to focus on areas you want to improve. Do you want to increase your assets or decrease your debt?
  2.  To Track your Financial Progress Your net worth can fluctuate as the stock market goes up or down, as your assets increase or as your debts increase. By comparing the value of your assets and liabilities each month or year, you increase your awareness of your financial progress. If your net worth is going up, you are moving in the right direction. If your net worth is declining, you’ll want to course correct. 
  3. Knowing Your Net Worth Can Provide Motivation Set a financial goal for yourself. Do you want to get out of debt or save a million dollars for retirement? Tracking your net worth lets you monitor how close you are to your goal. If your net worth numbers show that you are on track to hit your financial goals, it can encourage you to continue doing what you’re doing. 

Did you know….

  • Today, a healthy, upper-middle-class couple aged 65 have a 43% chance that one or both partners will live to see 95.
  • According to AARP, “you’ll need 70 to 80 percent of your preretirement income after you finish working.”
  • As you age, your expenditures decline except for healthcare expenditures. According to the US Bureau of Labor Statistics…” the total annual expenditures averaged $49,279 among older households. Expenditures declined from $56,267 for the 55–64 age group to $36,673 for the 75-and-older group.”

What are the steps to calculating your net worth?

Calculate your retirement net worth.  If not now then when?

Let’s Start Calculating Your Retirement Net Worth

You’ve inventoried your assets, including your employer retirement accounts, liquid, and non-liquid assets. In step 4, you pulled your assets together, and in step 5, you inventoried your debts. Now, let’s calculate your retirement net worth!

If you haven’t already downloaded our Retirement Net Worth Tracker, do it now by entering your email below. It will make this step much easier!! It’s FREE!

So, you’ve recorded your assets.

Retirement Assets, investments, IRA, 401k

Then you inventoried your debts on the 2nd tab of the spreadsheet.

debts, inventory your debts

Now the third tab will pull your asset and debt information into the Balance Sheet tab and calculate your Net Worth. You can enter the present value of your long term assets in this tab. For example, the current value of Mary’s house is $200,000, and her car is $8,000. In our model, Mary’s total assets equal $562,163, and her liabilities are $94,557. Mary’s net worth is $467,606.

Calculate your retirement net worth Total assets, total liabilities

Ignorance is NOT Bliss!

What is your net worth? Is it enough to carry you through retirement? Few people feel prepared to cover their retirement spending.

Only 10% of pre-retirees age 50+ said they felt prepared for a 30-year retirement, 16% said they are prepared for a 20-year retirement, and 27% percent are prepared for a 10-year retirement.

According to a 2017 Merrill Lynch study

Set yourself up for success by knowing your retirement net worth. Track your progress, and, if needed, you can start ramping up your savings plan and paying down your debt.

Retirement plan know your net worth

You should be so proud of yourself for working through these steps to calculate your retirement net worth. Now, you can explore options like paying down your debt, increasing your savings, changing your retirement timeframe, or starting a side hustle.

Were you surprised at your net worth? What steps are you exploring to increase your retirement net worth?

Blue Skies!!!


2 thoughts on “Step 6 – Calculating Retirement Net Worth”

  1. This is so fascinating to read, thank you! It’s so exciting to know how much you’re worth, even if you’re in the red. I always find that numbers have a tendency to motivate you to work harder 😀

    1. Connie Carmichael

      Thank you for stopping by. I’ve found so much empowerment in knowing my financial numbers so I know what to focus on.

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