When you’ve been working all your life, the light at the end of the tunnel is the dream of retiring. Before you retire, you need to know your net worth. Since your income will be reduced after retirement, knowing the net worth helps you plan your retired life better. Although net worth can be easily calculated by subtracting your liabilities from your assets, there are a lot of parameters that you need to consider.
Assets can be anything you own and consider the following while you are calculating the assets:
Real estate and cars
Start with the real estate and get help of a professional to evaluate your property. Property in general appreciates over time and if you’ve owned it for a while, there are good chances that the market value will be much higher than the price you paid. Similarly, if you have cars, RVs or even collectibles, calculate the market value.
Precious gems and metal
Just like real estate, precious stones like diamond, ruby and metals like gold and silver appreciate over time. There are a lot of professionals who offer evaluation services. By approaching these professionals, you can know your jewel’s worth. Similarly, if you have very old jewels, see if it qualifies as an antique. If it does, the value will be fairly high.
Items in your house
Get an approximate value of the household items like furniture, silverware and other electrical gadgets. Unlike real estate and jewels, house hold items do not appreciate over time. As a matter of fact, when the depreciation is calculated, you’ll realize that the current market value of your used household items is a fraction of what you paid during the time of purchase. Nonetheless, it still adds to your asset.
Retirement and bank accounts
Sum up your savings and your retirement account. You retirement account should ideally have IRAs, annuities, SEP IRAs and other savings that you had opted for. By approaching the financial intuitions, you can get a number on this and if you had saved wisely, you’d end up with a pretty big figure.
Stocks and other holdings
If you’ve invested, approach your trader to know the net worth of your stocks. Although this varies from time to time, holding stocks of successful businesses never let you down. Add the current market value of your stocks and mutual funds to get the net worth of your investments.
By adding all these, you will get your net asset.
Similarly, calculate the liabilities by adding the loans, mortgage and other debts. Loans include student’s educational loan, auto loan and other personal loans. Similarly, the credit card debt can be huge if you have been spending a lot. You need to add all these and the total sum is your liability.
To calculate your net worth, subtract your net liability from your net asset. What remains is your net worth and this is the figure that you will have to use when you are planning for retirement. In short, the net worth is more like your retirement budget.