The Federal Reserve's SCF only includes cash value of insurance policies. I consider their data to be the gold standard. All the wealth percentile calculators and articles I have seen just recycle this data.
Net worth calculator
- Thread starter orbops
- Start date
The Federal Reserve's SCF only includes cash value of insurance policies. I consider their data to be the gold standard. All the wealth percentile calculators and articles I have seen just recycle this data.
RetiredHappy
Thinks s/he gets paid by the post
- Joined
- Jun 27, 2021
- Messages
- 1,596
Whether one feels they are wealthy or not is in the mindset. Wealth is not measureable, unlike net worth. When you say someone is wealthy or not, it is by your yardstick. Someone who does not make much and lives a frugal lifestyle would feel that they are wealthy when they have $1M. Someone who makes a ton of money and has only $1M saved is going to feel poor. So, it is meaningless to ask the question of whether to wealth should include pension or not.
TheWizard
Thinks s/he gets paid by the post
Well, I tend to agree, since I cancelled my term insurance around age 45 once I had enough net worth to deal with the usual dependent issues if I met an early demise.
But sometimes, folks who own a large farm/ranch/business maintain life insurance indefinitely so that taxes on their multimillion dollar estate can be paid without selling the property.
Now whether that's whole life or renewable term life, I have no idea.
But my original point stands: life insurance in force at date of death.
Only the covered person can decide if that's something they intend to maintain or not...
TheWizard
Thinks s/he gets paid by the post
What are you defining wealth as?
RetiredHappy
Thinks s/he gets paid by the post
- Joined
- Jun 27, 2021
- Messages
- 1,596
I cannot define for others, since it is personal. For ME, I am wealthy because I can buy anything that I want, travel to anywhere that I want (fly business/first class, stay in a suite on a cruise), have a lifestyle that I love and I am relatively worry free. I don't care if the stock market goes up 20% or drops 20% as it does not change my well-being. I have "enough". For someone who is religious or having other meaning of life, they may feel wealthy because they are spiritually fulfilled.
Good reference to what I am referring to:
https://www.forbes.com/advisor/retirement/what-is-wealth/
Last edited:
Flyfish1
Recycles dryer sheets
I like the calculators at https://dqydj.com/net-worth-percentile-calculator/
They have one that calculates by age as well.
Also the calculators will include or exclude home equity.
They have one that calculates by age as well.
Also the calculators will include or exclude home equity.
mathjak107
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 27, 2005
- Messages
- 6,208
except that there is no guidelines once again as to what should you count…
just add the 3 million in it would take lump sum to equal our income streams we get
just add the 3 million in it would take lump sum to equal our income streams we get
F.I.R.E User
Thinks s/he gets paid by the post
I got 87% meaning?
TheWizard
Thinks s/he gets paid by the post
F.I.R.E User
Thinks s/he gets paid by the post
Not bad.
Retired Expat
Full time employment: Posting here.
^If you get down to including a chain saw, you also should include liabilities like paying "got-junk" to empty out your house of stuff nobody wants.
I look at it like I looked at my fathers NW when the time came for Assisted Living/Memory care. He was moving out of his home and we were selling most everything off. Sadly he didn't have a good chainsaw or I would have taken that. But pretty much everything else went so we could pay for his care which wasn't cheap! So Net worth is not about after you die but the years leading up to it.
TheWizard
Thinks s/he gets paid by the post
Perhaps.
When our second to pass parent, my dad, passed in 1994, we three siblings divied up certain possessions that we wanted without squabbling about value.
The other stuff got auctioned off.
There wasn't much of so called Investible Assets.
I didn't expect there would be.
They weren't wealthy people anywhere close to where I am...
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think I'd approach it the other way round. Assume about 4% of NW as income and add in pension, SS and/or annuities, etc. and get yearly income. There are yearly income comparisons out there if you're into that sort of thing.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Right idea, but not 4% of NW... 4% of investable assets, so excluding your homes unless you plan to sell one or both of them and use all or part of the proceeds from sale for living, etc.
tryan
Thinks s/he gets paid by the post
- Joined
- Mar 25, 2005
- Messages
- 2,604
It was discussed years ago that a way to value a pension or SS is 15 times the annual payment. Idea is you'll likely collect for 15 years ... so just add it up.
TheWizard
Thinks s/he gets paid by the post
Alternately, go to immediate annuities dot com and find the cost of purchasing annuity income of the same amount per month.
Problem is: you can't buy a commercial annuity that is COLAd the same as SS, but it will give you a ballpark idea...
mathjak107
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 27, 2005
- Messages
- 6,208
if you are counting 15 years of income shouldn’t the fair thing be to count 15 years of estimated known expenses ?
why bother counting money you don’t have in the first place other then mental masturbation?
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Since every month, you're one month closer to the end of the payments, don't you then need to reduce the calculated value each month? I think it's tricky and I'm not sure what you do with the number you end up with. If your SS is worth say $1 million, how do you use that number except for your own satisfaction. A bank will loan you money if you RECEIVE SS payments but will likely not lend you a dime on your NW - with or without SS calculation. I know 'cause we got a mortgage a dozen years back. They didn't care about assets - only income. Maybe that's changed, but I'm sure they wouldn't accept SS "calculated value" as an asset - if they accepted assets at all.
Just wondering and YMMV.
mickeyd
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
What is net worth used for? Showing off?
RetiredHappy
Thinks s/he gets paid by the post
- Joined
- Jun 27, 2021
- Messages
- 1,596
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Maybe just personal gratification.
It might give one a sense of whether his/her financial situation is improving or not. I pretty much do it once at the beginning of the year. A rising NW is a good sign to me that my plan is w*rking and I probably don't need to tweak much more than performing a simple rebalance. I certainly don't obsess over it and rarely do it more than once/year unless there is a major change along the way.
Obviously, if you don't find it worth while, don't bother. It's a personal decision whether it helps you or not because YMMV.
Ronstar
Moderator Emeritus
When I was in business, I had to produce a personal net worth statement to banks for business and real estate financing. Mainly for starting the business or increasing lines of credit.
USGrant1962
Thinks s/he gets paid by the post
That, and understanding your death tax exposure. A lot of states have estate and/or inheritance taxes at much lower levels than the (currently) high Federal levels.
And that is sort of the bottom line. Your net worth is your liquidation value (before taxes for death tax purposes) - annuities, SS, pension don't matter any more than your next paycheck matters while working.
+1
To me, NW is the market value of my estate at a given point in time (e.g. death). The government, for one, will certainly be interested in my NW upon my death if it exceeds the estate tax exemption amount so they can collect their (un)fair share.
