Net worth calculator

[mathjak107]

+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.

we had to look at estate size before new york went to the federal level .

but it never included phantom lump sums throwing in future money not received yet

which are actually future income streams

 

[FLSUnFIRE]

It amazes me the continuing saga/debate on NW.

It really is simple: Assets minus Liabilities.

All the consternation on what is used for withdrawal rate, etc are individual determinations. I don't use NW to determine WR, but that doesn't change the calculation for NW.

Flieger

Simple yet not! I don't think there is much disagreement about that but what is an asset and what is a liability is a bigger question. Many assets are not easy to value unless put on the market competitively (RE, art, Auto, CD with a penalty, potential taxes (capital gains, tIRA, etc). What about accounting for contingent liabilities or discounting/valuing income streams. GAAP apply? Even then there is some discretion. Is your audience the gov't or creditor that wants a cut or a lender (That wants to see lots of assets to give you the best rate)..... Is a car an asset or a liability (storing, maintaining, insuring, licensing, etc)... what about an illiquid asset that costs a lot to maintain/protect value? All the talk on this thread is about this. No one even mentioned if I should include the value of my potato peeler in my NW. I could get somewhere between 25¢ and $2 at a yard sale for it and if not then how do I value my illiquid potato peeler, scrap value?! Always a fun conversation and I enjoy seeing how different people chose to evaluate for themselves...

 

[Car-Guy]

What is net worth used for? Showing off?

I've never seen anyone here "suggest" that have "show off" money/NW. Okay, 5 or 10 million is nice or comfortable, but not "show off money" from my POV. And I don't think we have many $100m members here. If we do, they know they have serious money and don't need to "show off" or tell anyone. (Smart!)

Personally I like reading about others "lifestyles" and how they blow their dough. I don't think it's showing off if you have it, but YMMV.

 

[Andre1969]

I've never seen anyone here "suggest" that have "show off" money/NW. Okay, 5 or 10 million is nice or comfortable, but not "show off money" from my POV. And I don't think we have many $100m members here. If we do, they know they have serious money and don't need to "show off" or tell anyone. (Smart!)

Personally I like reading about others "lifestyles" and how they blow their dough. I don't think it's showing off if you have it, but YMMV.

It's never been my intention to show off. Sometimes, I guess I like seeing the NW (or investible assets at least) of others, just to see if I'm more or less on the right track. Of course there's only so much value in that, as some people might have large pensions or other income sources and don't need to stockpile as much. Or they live in HCOL areas where what I think is a lot of money might get you Jim Rockford's house trailer. And then there are plenty of others who do just fine on less.

And, I think there can be inspirational value in some "rags to riches" stories. For instance, I went from being about $30K in debt from a bad divorce, to being a (barely) millionaire in less than 20 years. While I've had some lucky breaks along the way, it shows that it can be done.

If anything, I tend to downplay it. There's no need to brag about it on here, because, for one thing, none of you really know me. For all you know, I could just be making things up. There are people who do that, and get off on it. I can't see why someone would waste time doing something like that, but they're certainly out there. But on top of that, no matter how much I have, there are plenty of others who have more.

 

[old medic]

No one even mentioned if I should include the value of my potato peeler in my NW. I could get somewhere between 25¢ and $2 at a yard sale for it and if not then how do I value my illiquid potato peeler, scrap value?.

My biggest fear is my DW liquidating my collection of fishing and firearms....
For what I told her I paid for them.......

 

[Ronstar]

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.

So I'm wondering. Illinois has a 16% death tax on estates worth more than $4m. Lots of talk here that annuities don't count toward net worth.

So in Illinois, could someone just buy an annuity to avoid the state death tax?

 

[HI Bill]

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.

That's fine, as long as you won't be spending any of it....

 

[Car-Guy]

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.

That's fine, as long as you won't be spending any of it....

I always thought the best way was to take your remaining life expectancy from the CDC tables and multiply your SS payments by that.

 

[Koolau]

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.

Very good point about estate NW value for tax purposes (Federal and State though Federal is not as imposing as many states.)

I can imagine someone actually moving to avoid state death taxes. Someone mentioned $4 million limit for Illinois. We don't all have that amount, but some of us do. I think I'd consider moving if that were an issue in my state - and to me. YMMV

 

[Flieger]

Simple yet not! I don't think there is much disagreement about that but what is an asset and what is a liability is a bigger question.

Outside of whether SS or Annuity (same thing IMO) is counted as an asset, I don't see a big question here. It's just a matter of if you want to count the silverware in the cabinet value or not. Is it an asset, sure. Does it make a difference to the $2MM total?

Is your audience the gov't or creditor that wants a cut or a lender (That wants to see lots of assets to give you the best rate).....

Exactly. BTW, try to include a pension or NPV of SS in your NW calculation for the above requester and I think you will get your answer. Including those valuations are the "feel good" part of self assessment.

Flieger

 

[USGrant1962]

Very good point about estate NW value for tax purposes (Federal and State though Federal is not as imposing as many states.)

I can imagine someone actually moving to avoid state death taxes. Someone mentioned $4 million limit for Illinois. We don't all have that amount, but some of us do. I think I'd consider moving if that were an issue in my state - and to me. YMMV

PA has no exemption amount. 4.5% of the first dollar going to descendents, and 11% or 15% to other heirs. But then again I guess you don't need to know your NW because it doesn't matter how big your estate is, except to do the math.

Or MD where it is 16% of everything over $5M NW.

We've had an idea to move back to PA from MD to save a boatload on regular income taxes and always knew about the PA death tax (our parents live/lived there), but I didn't realize that after $7M NW Maryland becomes more onerous on that tax too.

Also interesting that people complain about the phrase "death tax" but that is IRS terminology in 26 CFR § 20.2011-1 - Credit for State death taxes. I had to look it up to figure out how MD works.

 

[mathjak107]

new york is the same as the federal…we have a tax cliff though .

go over the limit by just 5% and you loose the entire exemption and the estate is taxed from dollar one .

many years ago new york was lower and we needed a pair of disclaimer trusts to pass 2x the limit