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Net Worth Analysis

The Net Worth Analysis (NWA) was created to answer the most common question asked by clients: “Am I on target to be able to retire comfortably?” The NWA is designed to track the accumulation of Invested Assets for pre-retirees and the retention of Invested Assets for retirees. We do not charge for the initial creation or annual update of the NWA.

The key for you to achieve a financially secure retirement (“financial independence”) is to accumulate sufficient Invested Assets. These are your financial assets (taxable and retirement) and rental real estate that can generate income. We exclude the equity in your principal residence. To become financially independent, you need to grow your Invested Assets to a level where they can generate sufficient income to replace your earned income.

So how much in Invested Assets will be enough for you to retire comfortably? Studies have shown that a “sustainable annual withdrawal rate” is 4.0 percent to 4.5 percent of the Invested Assets. The actual amount depends on your source of other income (social security, pension, etc.), your level of living expenses, your life expectancy, the rate of return you will earn from your investments, and the future rate of inflation. Depending on these factors, it could be as little as one million dollars to more than five million dollars.

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