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Reply to "Question for those of you to track your net worth"
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[quote=Anonymous][quote=Anonymous]How do you deal with 401k assets? Do you include them in your net worth pre-tax or do you apply a factor to reduce their value to account for taxes when you ultimately withdraw? Right now, I multiply my 401k assets by .65 to account for future taxes. [/quote] It’s fine to apply the .65 reduction. What matters at the end is the year-to-year changes to your net worth. As long as you keep things consistent, you can meaningfully compare the changes year-to-year. That all being said, the term “net worth” has a definition. And if you go with that definition, you will not be applying any haircuts. The way I do it, I calculate my NW. Then I calculate many other derivatives that I find useful. For example, I exclude real estate, or money that is earmarked for certain purposes. These metrics are useful to me and I track them each year. They are not NW though.[/quote]
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