Easiest way to start a discussion is to try to define Net Worth.
With no agreement on the term, threads often turn into long explanations of how to calculate the number, usually based on the question, "how much is enough?"
Just a few of the differences:
Include the value of the home?
Include social Security?
Expected inheritance?
COLA on Pension?
Effect of age? Expected Future Wages?
Effect of Market, and Charting expectations.
Net Present Value... any estimated values.
Inclusion of Personal Property... Cars, Jewelry, Furniture, Collectibles, Antiques, Tools, 2nd homes, camps, recreational vehicles/property, life insurance,
Some of these items may have substantial net worth value, as in SS, which may have a Present Value of $400,000 or even more. Projecting a COLA'd Pension over a 30 year period could be much more. Annuities are often overlooked as an asset, though again.... Present Value could be a major factor when putting together a long term plan, which uses Net Worth as a base.
Then there are varying reasons for using one or another factor estimate net worth, with regard to age. A $400,000 house that might be considered as necessary at age 50, may make more of a difference in planning for someone who is 75, who is considering to use the cash value and moving to an apartment or a continuing care facility.
A key to making a plan using Net Worth, may be in understanding "Tangible Net Worth", especially in the case of finite planning... ie... using the amounts on the basis of one's expected lifetime, not including leaving an inheritance.
Using any calculator including FireCalc must include a full understanding of all of the above factors. Simple isn't always good.
At this point, I'll put in a disclaimer... Not being rich, I suppose investment ignorance doesn't qualify me to give advice, but a quarter century of living unemployed but above the poverty level has to count for something.
......................................................................................
That said, some more basic points about net worth here:
Calculating Tangible Net Worth
How To Calculate Your Tangible Net Worth
Present Value of SS
What Is The Present Value Of Your Social Security Benefits? - Forbes
Money Scoreboard
Money Scorecard: How Do You Rate? - Forbes
With no agreement on the term, threads often turn into long explanations of how to calculate the number, usually based on the question, "how much is enough?"
Just a few of the differences:
Include the value of the home?
Include social Security?
Expected inheritance?
COLA on Pension?
Effect of age? Expected Future Wages?
Effect of Market, and Charting expectations.
Net Present Value... any estimated values.
Inclusion of Personal Property... Cars, Jewelry, Furniture, Collectibles, Antiques, Tools, 2nd homes, camps, recreational vehicles/property, life insurance,
Some of these items may have substantial net worth value, as in SS, which may have a Present Value of $400,000 or even more. Projecting a COLA'd Pension over a 30 year period could be much more. Annuities are often overlooked as an asset, though again.... Present Value could be a major factor when putting together a long term plan, which uses Net Worth as a base.
Then there are varying reasons for using one or another factor estimate net worth, with regard to age. A $400,000 house that might be considered as necessary at age 50, may make more of a difference in planning for someone who is 75, who is considering to use the cash value and moving to an apartment or a continuing care facility.
A key to making a plan using Net Worth, may be in understanding "Tangible Net Worth", especially in the case of finite planning... ie... using the amounts on the basis of one's expected lifetime, not including leaving an inheritance.
Using any calculator including FireCalc must include a full understanding of all of the above factors. Simple isn't always good.
At this point, I'll put in a disclaimer... Not being rich, I suppose investment ignorance doesn't qualify me to give advice, but a quarter century of living unemployed but above the poverty level has to count for something.
......................................................................................
That said, some more basic points about net worth here:
Calculating Tangible Net Worth
How To Calculate Your Tangible Net Worth
Present Value of SS
What Is The Present Value Of Your Social Security Benefits? - Forbes
Money Scoreboard
Money Scorecard: How Do You Rate? - Forbes
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