To calculate your net worth, add up what you own and subtract everything you owe. The formula is simple: assets − liabilities = net worth.
But especially once retirement is getting closer, I don’t want you to stop at that one number. A $1 million net worth can mean $900,000 available in cash and investments—or it can mean most of the wealth is tied up in a house. Same headline number. Very different financial flexibility.
That’s the part most net worth calculators miss. This guide shows you how to calculate net worth correctly, what belongs in the calculation, how to avoid double-counting home equity, and how to read the result without letting a national average tell you whether you’re “winning” or “losing.”
Quick Answer
Your net worth is the current value of your assets minus your current liabilities. Include account balances such as cash, brokerage accounts, 401(k)s and IRAs; include property at a reasonable current market value; and subtract debts such as mortgages, credit cards, student loans and auto loans. If retirement is near, also separate home equity from the cash and investments that can actually support spending. Your total net worth tells you where you stand; the composition of that net worth tells you how flexible you are.
Key Takeaways Ahead
How to Calculate Your Net Worth in 3 Simple Steps
You do not need a complicated spreadsheet to get a useful first answer. You need one snapshot date, reasonable values, and a rule that keeps you from counting the same thing twice.
Step 1: Add Up Your Assets
An asset is something you own that has financial value. For a personal net worth calculation, use the amount you could reasonably say the asset is worth today—not what you paid for it and not what you hope it will be worth later.
- Cash and bank accounts: checking, savings, money market accounts and certificates of deposit.
- Taxable investments: brokerage accounts, stocks, bonds, mutual funds and exchange-traded funds.
- Retirement accounts: 401(k), 403(b), IRA and similar account balances. Yes, your 401(k) counts toward net worth.
- Real estate: your primary home, rental property and other real estate at a reasonable current market value.
- Business interests: a supportable current value for an ownership interest when you can estimate it responsibly.
- Vehicles and other saleable property: use realistic resale value, not replacement cost or sentimental value.
- Other financial assets: for example, cash value in a permanent life insurance policy when applicable.
The Federal Reserve’s Survey of Consumer Finances net-worth categories likewise include financial assets, retirement accounts, vehicles, a primary residence, other real estate and business interests in the asset side of the household balance sheet.
Don’t Double-Count Home Equity
If you list your home’s full market value as an asset, list the mortgage balance as a liability. Do not also add “home equity” as another asset. That counts the same wealth twice. The math already creates your equity automatically: home value minus mortgage debt.
Step 2: Add Up Your Liabilities
Liabilities are amounts you currently owe. Use the outstanding balance on the same snapshot date you used for your assets.
- Mortgage and home-equity loan or HELOC balances
- Credit card balances
- Student loans
- Auto loans
- Personal and installment loans
- Margin loans or other investment-related debt
- Taxes or other amounts already owed but not yet paid, when they are a real current obligation
One thing I would not put into a basic personal net worth statement is the future value of Social Security or a traditional defined-benefit pension. Those can be extremely important to retirement income, but they are not the same thing as an account balance you own today. Keep future income and current net worth as separate planning questions.
Step 3: Subtract Liabilities From Assets
Net Worth Formula
Total assets − total liabilities = net worth
If you own $1,480,000 of assets and owe $180,000, your net worth is $1,300,000.
Want the arithmetic done for you? Use my Net Worth Calculator. I deliberately keep the calculator on its own page now instead of making this guide drag three competing calculators behind it like carry-on luggage.
If you want a dated worksheet you can update over time—not just today’s answer—use a Net Worth Statement. That page owns the tracking process; this page owns the calculation and interpretation.
The Number Is In. Now Separate Total Net Worth From Spendable Wealth
This is the distinction I care about more as someone moves from accumulation toward retirement: total net worth is not the same thing as money available to fund your life.
Suppose the $1.3 million net worth from the example above is made up this way:
| Part of the Balance Sheet | Amount | What It Tells You |
|---|---|---|
| Cash + taxable investments + retirement accounts | $900,000 | Financial assets that can potentially support spending, with different tax and access rules. |
| Home value | $550,000 | A valuable asset, but not spendable without selling, borrowing against it or changing housing. |
| Vehicle | $30,000 | Part of net worth, but usually a depreciating asset you need to live your life. |
| Mortgage | −$180,000 | A liability that reduces total net worth. |
| Total net worth | $1,300,000 | Your complete balance-sheet snapshot. |
That household has $1.3 million of net worth, but $370,000 of it is home equity and another $30,000 is a vehicle. That doesn’t make the house or car “bad” assets. It means a retirement plan cannot treat every dollar of net worth as if it sits in a brokerage account ready to pay next month’s electric bill.
If that distinction matters in your situation, the next useful measure is how to assess your liquid net worth. It answers a different question: how much of your financial position is actually accessible without first selling an illiquid asset such as a home.
Michael’s Take
A high net worth can make you feel secure while a cash-flow problem is quietly forming underneath it. When retirement is close, I want to see both numbers: what you’re worth and what you can actually use. One is the scoreboard. The other tells me how the game can be played.
I’ve worked with physicians who began their careers with a negative net worth because medical-school debt overwhelmed their early assets. Some later built substantial wealth. The lesson was never that the negative number didn’t matter. It was that a net worth number is a baseline, not a character grade.
Keep Your Net Worth Useful
Once you know your net worth, the useful question becomes what changed and what deserves attention next. My Financial Clarity emails focus on those kinds of practical decisions—net worth, cash flow, retirement tradeoffs and the money moves that actually change your options.
Net Worth by Age: Use the Median, Then Stop Comparing
Search for “average net worth by age” and you will find numbers that can make almost anyone feel either behind or oddly triumphant. The first problem is that average and median are not interchangeable.
The Federal Reserve’s 2022 Survey of Consumer Finances shows just how wide the gap can be. The mean gets pulled upward by very wealthy households. The median is the middle observation and is usually the better starting point when you want a peer benchmark.
| Age of Reference Person | Median Net Worth | Mean Net Worth |
|---|---|---|
| Under 35 | $39,000 | $183,500 |
| 35–44 | $135,600 | $549,600 |
| 45–54 | $247,200 | $975,800 |
| 55–64 | $364,500 | $1,566,900 |
| 65–74 | $409,900 | $1,794,600 |
| 75+ | $335,600 | $1,624,100 |
Source note: These are Federal Reserve 2022 SCF figures in thousands of 2022 dollars, converted above to whole-dollar amounts. As of August 2026, the Federal Reserve still identifies the 2022 SCF as the most recent survey conducted.
Notice the age-65-to-74 line: the median is $409,900 while the mean is nearly $1.8 million. If you compare yourself only with the mean, you are comparing your household with a number heavily influenced by the wealthiest families in the group.
But even the median cannot answer the question most people actually care about: “Am I financially ready for retirement?” Two households can have the same net worth and wildly different spending, pensions, Social Security benefits, taxes, debt, health costs and portfolio mix. A benchmark can tell you where the middle was. It cannot build your retirement income plan.
The Comparison Trap
Being above the median does not prove you’re retirement-ready. Being below it does not prove you’re in trouble. A benchmark is useful for context; your own spending, income sources, debts and accessible assets determine what the number means for you.
Michael Ryan’s Playbook: What to Do After You Know Your Net Worth
The point of calculating net worth is not to admire the number. It is to identify the next constraint.
1. Fix a Weak Cash Position Before Chasing a Bigger Score
If most of your wealth is tied up in a house and retirement accounts while your cash reserve is thin, your next move may be liquidity—not maximizing the headline net worth number. Net worth is allowed to grow more slowly while your financial resilience improves.
2. Look for Expensive Debt That Is Working Against You
I have seen people keep investing every month while carrying costly revolving debt because investing felt productive and debt payoff felt boring. The balance sheet exposes that conflict. Paying $1 of debt with $1 of cash does not magically add $1 to net worth—the asset and liability fall together. The gain comes afterward: less interest drag, better cash flow and fewer dollars being claimed by the lender.
That does not mean “pay every debt before investing.” Interest rate, employer matching contributions, taxes, liquidity and your overall plan can change the priority. The net worth statement shows you the problem; it does not replace the decision.
3. Track the Direction, Not the Daily Wiggle
A house estimate can move. Markets certainly move. Your car will not send you a polite memo before depreciating. That is why I prefer a consistent snapshot schedule rather than compulsively checking net worth every morning.
Quarterly is plenty for most people who want a planning signal without turning personal finance into a scoreboard app. Use the same valuation method each time so the trend reflects your financial decisions instead of changes in how you guessed the numbers.
Your Financial Future Starts With a Better Baseline
Net worth is useful because it forces your financial life onto one page: what you own, what you owe and what is left. But the most useful version is not the biggest number you can defend. It is the most honest one.
Calculate it consistently. Separate home equity from the assets that can support spending. Use age benchmarks for context, not permission or shame. Then ask the question that actually moves your plan forward: What is the weakest part of this balance sheet, and what would improve it next?
That’s when net worth stops being a score and starts becoming what it should have been all along: a decision tool.
