How to forecast your net worth

Step 1: Today's balance sheet

List every asset at what it is worth today and every debt at what you still owe:

• Cash: checking, savings, money market accounts and CDs.
• Investments: brokerage accounts, with what you paid for them (the cost basis), since unsold gains carry a tax bill.
• Retirement accounts: 401(k), 403(b), 457 and IRA balances, traditional and Roth kept apart, plus HSAs and 529 college plans.
• Property: your home and any rentals at market value, with each mortgage listed as a debt.
• A business: what your share would sell for, often 2 to 4 times yearly owner earnings for a small firm.
• Vehicles at resale value, and debts with their rates and payments.

Step 2: What you save each year

Saving is income minus taxes, spending and debt payments, plus what goes into retirement accounts straight from your paycheck and any employer match. Get the taxes right: federal and state income tax, 7.65% for Social Security and Medicare on wages, and 15.3% self-employment tax on side income. In our example (a couple earning $160,000 with a toddler, renting before buying a home), year one brings $160,000 of income, $27,272 of taxes and $108,000 of spending, and the household saves $16,431, about 10% of income, counting its own 401(k) contributions.

Retirement contributions have limits: for 2026, $24,500 into a 401(k), plus $8,000 from age 50 or $11,250 at ages 60 to 63, and $7,500 into an IRA. Money saved beyond that goes into a regular brokerage account.

Step 3: Growth, in today's dollars

A forecast in future dollars flatters you: at 2.5% inflation, $1 million in 40 years buys what about $372,431 buys today. Convert each growth rate to a real rate instead:

Real rate = (1 + growth) / (1 + inflation) - 1

A 6.5% return with 2.5% inflation is a 3.9% real return. Over the long run US stocks returned about 10% a year and 10-year Treasury bonds about 4.5% (1928 to 2025), but forecasts usually assume less, because valuations are high and a mix of stocks and bonds earns less than stocks alone. Home prices have risen about 4% a year, roughly 1.5 points above inflation.

Loans work the other way. A fixed mortgage payment never rises, so in today's dollars it shrinks every year. That quietly helps homeowners over a 30-year loan.

Here is how our example family's net worth grows at three return assumptions:

Net worth at the end of the year the older partner reaches each age, in today's dollars, at 2.5% inflation. Same income, spending and events in every column; only the return on investments and retirement accounts changes. Financial independence is when investments times 4% cover a year's spending.

Step 4: The life events that move it most

Big events cost more than their price tag, because the money spent would otherwise keep growing for decades. A good forecast lets you switch each one off and see the difference. In the example at 6.5% returns:

• College for one child at public in-state prices ($25,850 a year for tuition, fees, housing and food in 2025-26, part paid from a 529) changes net worth at retirement by -$185,923 and at 95 by -$586,281.
• Buying a home instead of renting changes net worth at retirement by -$17,556 and at 95 by -$799,963. Whether owning wins depends mostly on rent compared with the price, the mortgage rate, and how the down payment would have grown if invested.
• Marriage and divorce change everything at once: two incomes and joint filing on the way in; a split of every asset and debt, legal costs and support on the way out.
• Retiring a few years earlier removes your highest-earning, highest-saving years and adds years of withdrawals, often the largest single lever in the whole plan.

Step 5: Test it against financial independence

The common test is the 4% rule: investments can support yearly spending of about 4% of their value, rising with inflation, over a 30-year retirement. Spending $60,000 a year beyond Social Security and pensions therefore takes about $1.5 million in investments. Your home does not count unless you plan to sell it. For retirements longer than 30 years, 3% to 3.5% is safer. If your forecast reaches the target years before you plan to retire, you have room to spend more, work less or retire sooner; if it never does, the forecast shows which change closes the gap fastest.

The retirement years

Retirement changes the shape of the forecast: paychecks stop, savings start paying the bills, and a few rules take over.

• Social Security depends on when you claim. With a full retirement age of 67, claiming at 62 pays 70% of your full benefit for life and waiting until 70 pays 124%. A $30,000 full benefit becomes $21,000 or $37,200 a year.
• Required minimum distributions force withdrawals from traditional 401(k)s and IRAs from age 73, or 75 for anyone born 1960 or later. At 75, a $1 million balance requires $40,650, taxed as income whether you need it or not.
• Roth conversions in the years between retiring and RMDs can move money to tax-free accounts at lower rates, though large ones can raise Medicare premiums two years later.
• Health care before Medicare is a big line: a benchmark Marketplace plan averages about $15,500 a year per person at ages 55 to 64 in 2026 before subsidies. From 65, Medicare with a drug plan and a supplement runs about $5,500 a year per person.

Plan for a range, not a number

A single forecast assumes every year earns its average return, which never happens. Markets that fall early in retirement do the most damage, because you sell investments while they are down. Run the same plan through many simulated markets and look at the chance your money lasts: our example family's plan lasts in 100% of 1,000 simulated markets with typical stock-and-bond swings, ending between $3,900,087 and $21,785,535 in the worst and best tenth of runs. Compare choices as scenarios side by side, and check how you stand against families your age in the Federal Reserve's survey.

How you compare by age

The Federal Reserve's Survey of Consumer Finances, the most detailed survey of American household wealth, found these figures for 2025:

Family net worth by age of the head of household, in 2025 dollars. Median: half of families have more, half less. Mean: the average, pulled up by the wealthiest families. All families: median $215,900, mean $1,241,500.

The gap between median and mean is the story: wealth is concentrated, so the average family does not have the average net worth. Comparing yourself with the median for your age is more realistic, and comparing your forecast with your own goals is more useful still. The retirement calculator tests a plan against 1,000 simulated markets, and the Rule of 72 guide shows how fast money doubles at different returns.