1. What is Net Worth?

Net worth is a measure of financial health calculated by subtracting liabilities from assets, including pension values. It provides a comprehensive view of an individual's or household's financial position.

2. How Does the Calculator Work?

The calculator uses the net worth equation:

Where:

• \( Assets \) — Total value of all owned property and investments
• \( Pension \) — Current value of pension funds
• \( Liabilities \) — Total amount of debts and obligations

Explanation: The equation sums all assets and pension values, then subtracts all liabilities to determine overall net worth.

3. Importance of Net Worth Calculation

Details: Regular net worth calculation helps track financial progress, plan for retirement, and make informed financial decisions. It's a key indicator of financial stability.

4. Using the Calculator

Tips: Enter all values in dollars. Include all assets (home, investments, savings), pension values, and liabilities (mortgages, loans, credit card debt). Values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I include my home in assets?
A: Yes, include your home's current market value minus any selling costs you might incur.

Q2: How often should I calculate my net worth?
A: Most financial experts recommend calculating net worth at least annually, though quarterly is better for active financial planning.

Q3: What's considered a good net worth?
A: This varies by age and location, but generally a positive net worth that grows over time is good. Many aim for net worth = (age × annual income)/10 by retirement.

Q4: Should I include future Social Security benefits?
A: No, this calculator focuses on current assets and liabilities. Future benefits are better considered in retirement income projections.

Q5: How does pension valuation work?
A: For defined contribution plans, use current account balance. For defined benefit plans, consult your plan administrator for current lump-sum value.