Net worth is the difference between your assets (the value of what you own) and your liabilities (the money you owe). Net worth is how much money you really have. You could think of it as your scorecard. Every three or four months it is useful to use this calculator to track how your net worth is growing.
Retirement Calculator - a.k.a. Financial Freedom Plan Calculator
There are a lot of online retirement calculators, so I originally assumed I'd just recommend the best of them for you to use. However I was surprised that I couldn't find one that did a really good job. So, I've created one that is both comprehensive and easy to use. A well thought out plan depends on the right input.
Save your money so that someday you can retire and live the "good life." This idea has become entrenched in our society as the cornerstone of long-term financial and life planning. Well, right here and now, I ask you to challenge that idea. For most people it is a bad goal and a misguided life plan. Why should you have to wait until you are 65 before you can live the life you wish? Who says you must wait until you may no longer be able to enjoy life to the fullest? Instead, replace the R-word, retirement, with two new ones: Financial freedom. This is the goal to pursue.
Achieving financial freedom means being able to work at what you want, when you want, live where you want, and to do it a lot sooner than 65. You absolutely can make this happen. If you don't think so, the only person standing in your way is you.
There are two ways to accomplish financial freedom: Either possess the money you need to be totally free to do whatever you want or possess enough money to be able to earn less and live a better life a heck of a lot sooner. The second approach will get you free faster. (You can always plan toward total freedom and change your mind along the way.)
Your Results
Once you've gotten your report, if you are happy with your projected results, I congratulate you. If you are like most people, your first attempt will leave you somewhere between unhappy with the results and quite worried. Don't let that discourage you. What you need to do in this instance is take a hard, new look at all of your plans. Examine the factors and approaches that can or may change those results. Pay particular attention to how you can reduce your cost of living in retirement and especially on how you can save more now. Modest adjustments in both of those areas can make a big difference in the outcome of your plan.
A shortage of time to save is the most difficult obstacle you may encounter. To address this, the first option is to live a lot more frugally now to save a lot more. The second is to pare back your lifestyle and spending expectations for retirement. I remind you again that most spending is optional, so look for the right balance between your spending of today and your needs of tomorrow, including whether you can and should downsize your retirement plans a little.
The third option is to delay your retirement. Use the retirement calculator again and see what happens if you delay your retirement for three or four years more. Such a move can often go a long way toward solving any shortfalls, as it both preserves and adds to your assets. Are you planning to retire just because you're sixty-five, or because you hate your job? It's far better to base your decision on waiting until you've made the money you need to retire comfortably. You may also find that a decision to continue working, either on a full-time or part-time basis, may not be such a bad thing. Many people end up getting a better overall quality of life than they would have had being totally "free" by following that path.
