How to Calculate Net Worth for Retirement
According to the Indiana Department of Financial Institutions, fewer than 50 percent of workers have started saving for their retirement years. Analyzing how much you own and comparing it to how much you owe is a first step toward retirement planning. This is called your net worth statement. Think of it like a yearly health checkup for your finances. Once you know your net worth, work with your financial adviser to develop a realistic retirement plan.
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Instructions
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1
Add up all the cash in your savings and checking accounts.
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2
Determine the value of your home and all other real estate you own and add it to the total. If you're not sure of the current value of your home, request an appraisal from a real estate agent or check your property tax bill.
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3
Determine the current value of all of your stocks and mutual funds. Check a newspaper for the value of your stocks. Add it to the total.
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4
Determine the value of any retirement plans you have. Add up the amount that you have access to today, should you decide to quit working. Check with your company's human resources office if you are unsure of the value of your retirement plan.
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Add the cash value of your life insurance policies to the total. This number is different from the policy's face value. If you're not sure of the cash value, ask your insurance agent.
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6
Estimate the value of your vehicles. Since the value of automobiles tends to depreciate, consult a blue book price guide or a dealer to get this number. Include the value of any boats and recreational vehicles you own to the total.
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Estimate the value of other expensive items. Place a conservative value on any antiques, jewelry, artwork and furniture you own and add these numbers to the total. Exclude less expensive items such as clothing and electronics.
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8
Add up all of your debts. Include personal and automobile loans, student loans, credit card balances, mortgages, judgments and any other debts you owe. These are called liabilities.
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Subtract your total amount of liabilities from the total amount of your assets. This figure is your current net worth.
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10
Estimate your current spending habits for a year. Keep track of all spending, including utilities bills, groceries and other expenses, for a few months to estimate how much you ordinarily spend in a year.
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Estimate your Social Security benefits and compare that amount to your net worth and your typical spending habits to determine whether you can afford to retire.
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