Do you have a net worth statement that you update regularly? Whether or not you do, you’ll want to learn about the psychological benefits that this exercise can create. In this episode of The Retirement Answer Man show, we’ll discuss what a net worth statement is and how you can gain from creating one regularly. 

You’ll also hear several listener questions that range from inherited IRAs to I-bonds, to SPIA annuities. If you are interested in rocking retirement, you’ll need to arm yourself with the knowledge to help you navigate this change in life. Listen in to get started on your retirement education journey. 

A Rock Retirement Club announcement

If you are looking to join the Rock Retirement Club you can sign up for the waiting list until we open enrollment again in late January. We closed enrollment in early December to restructure the club a bit and introduce periodic enrollment so that new members can be a part of a cohort. This will help freshmen members to take full advantage of their membership as they work their way through all the benefits that the club provides. If you are interested in checking out the Rock Retirement Club, head on over to the website and join the waiting list to receive the latest email updates. 

What is a net worth statement?

If you have listened to the Retirement Answer Man show in the past, then you already know that a net worth statement is a statement of the resources you have accumulated with your wealth. 

Your net worth statement lists all of your assets and their values and your debts and their values. Assets like your retirement accounts, investment accounts, or property are listed on the left side of the net worth statement. These assets can be categorized by whether they are tax-deferred, after-tax, or tax-free accounts. On the right side is the debt column. Total each column up to see the value of each. Once you do that you’ll subtract the debts from your assets and have your net worth. 

Creating this valuable financial tool is a way to understand the cumulative impact of the financial decisions you have earned. Do you have a net worth statement that you update regularly? 

The 5 ways you can use your income

Since there are only 5 things that you can do with your income, your net worth statement reflects those financial decisions that you have made. These are the 5 ways that you can use your money:

1. Spend it. 
2. Pay down debt
3. Give it away.
4. Save it as cash in an emergency fund.
5. Invest for the future.

For every dollar you have earned you have made a decision (whether consciously or unconsciously) to do one of these 5 things, so your net worth statement is a reflection of these choices. 

Creating a net worth statement provides a psychological impact

By updating your net worth statement periodically you’ll be able to compare how your finances reflect your values and whether you are using your finances to stay in line with your goals. If you identify any incongruencies then you can address the behavior before it gets out of hand. 

Have you ever put together a net worth statement? When was the last time you updated it? As a rule of thumb try revisiting it every 6 months.

Make sure to listen to the next episode to hear my word of the year!

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

• [1:56] What is a net worth statement?
• [4:50] Creating a net worth statement provides a psychological impact

LISTENER QUESTIONS

• [11:21] You can work with LTCI Partners directly
• [14:45] Mike asks if I-bonds are a no-brainer
• [20:12] Examples of how people have blended retirement with meaningful work
• [24:28] A comment about SPIA annuities
• [32:25] Alternatives for the fixed income portion of assets in retirement 
• [35:27] Navigating the changes to the inherited IRA RMD rules

TODAY’S SMART SPRINT SEGMENT

• [37:51] Consider creating experiences rather than giving gifts for the holidays

Resources Mentioned In This Episode

BOOK - Retirement Planning Guidebook by Wade Pfau

Wade Pfau - Retirement Researcher

TreasuryDirect.gov

LTCI Partners

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center