How to calculate your "worth"?

[haha]

How to calculate your worth?

Ask your wife or girlfriend.

 

[imoldernu]

Ask your wife or girlfriend.

Reminds me of a business trip to Texas. Sitting in Billy Bob's with some co-workers and their friends... Conversation turned to cattle farming.
I asked one of the friends how many cattle he had...
Received a kick under the table from a co-worker, and an answer from the friend.
"Don't rightly know... best way to figure is to count the number of legs, and divide by four."

 

[rodi]

There's Net Worth and there's ER net worth.

I have a very good friend who has no 401K, very little in investments ( think maybe less than 300K), no Pension, no annuity or any regular income stream. He doesn't work.

He does have about a million dollars in farm equipment, 1000+ acres of excellent farmland, a $400K house, a large barn, silo and dryer, a top of the line pickup truck, a new Buick Lacrosse and a museum that he created for the public, filled with antique farming equipment.

He's 87... how would you calculate his "net worth"?

His net worth is a straight up addition of all of the assets' present values. Then subtract out any liability.

But his ER net worth is the money that can be used to live on. That would be his savings, any farm equipment and land he's willing to sell to generate cash, and any income streams from the museum.

 

[travelover]

Ask your wife or girlfriend.

Or your wife's lawyer.

 

[GTFan]

If I am understanding your question correctly, it is desirable to have different buckets of money that are treated differently for tax purposes (tax deferred and money that has already been taxed) so you have a choice, depending on your income, if you want to:

(1) withdraw from a 401K knowing you will be taxed on your withdrawal (before the RMD-Required Minimum Distribution at age 70 and 1/2)
(2) withdraw from a Roth IRA knowing you will not be taxed (if you were able to qualify for a Roth)
(3) withdraw from a "taxable account" which is typically money you have already paid taxes on thru the years so the basis is not taxed again.

For (3) yes the basis is not taxed, but you are likely to have substantial gains that may be if invested in the typical index fund. And then you have to factor in whether you want to maximize ACA subsidies as much as possible by keeping your reported taxable income low or max out Roths instead.

It's not as simple as it looks, withdrawal-wise. Some thought needs to be put into how you're going to take the money out regardless of how you calculate how much you have available, or which buckets they're in.