Your Net Worth: Are You On Track For Retirement?

photo credit: kevindooley

If you’ve ever wondered how you can calculate whether or not you’re on track for retirement then a handy article at Yahoo Finance recently gives some great tips. It all hinges around calculating your net worth and then figuring out if your net worth is about right for your age and demographics.

Net worth is relatively easy to calculate and follows a simple formula: Net worth = Assets - Liabilities. So figure out the value of everything you own (that could be quickly turned into cash). Subtract the total amount of your debt, and you’ve got your net worth.

Then you have to figure out if your net worth is about right for your age, and economists disagree on the best way to decide this. For example, if you’re a 30-year-old and working a job that pays $25,000 a year, a net worth of $75,000 (so far) is reasonable, according to some; others say it should be around $150,000 because by that stage you should have a job paying more like $50,000 a year. It also depends on where you live, whether you are self-employed or not, your education level and other factors. But the one thing everyone agrees on that in the decades leading up to retirement, it’s worth keeping an eye on your net worth and trying to build it up.

Tags: Finances