In my most recent post, I updated my investment account balances as of December 31, 2022. In this post, I’m going to take a crack at estimating my total net worth.
As a reminder, my total savings (basically accounts with stocks and bonds in them) reached about $437,000 as of the end of 2022. I am going to be starting with that balance and adding in a couple other assets (net of their liabilities of course). I don’t have a ton of other assets, so this post shouldn’t be too long.
First, I own a small house. I ran a couple of “scenarios” (basically using different assumptions for market values for the property). Under a more aggressive scenario (basically using Zillow’s estimate), I would have about $220,000 in equity.
A slightly less favorable estimate of the value yields an equity estimate of about $100,000. This estimate is basically applying a 10% capitalization rate to estimated (gross) rents for the property.
I’m going to go split the different between these estimates and use a $160,000 figure for my RE equity. I don’t want this figure to be overly impacted by real estate fluctuations over which I have no control, but I also don’t want to totally ignore the impact of real estate on my balance sheet (especially the value of the rent I am avoiding/hedging by owning my home).
In addition to the real estate, I have a little deferred compensation plan via my employer. It is basically a deferred income annuity (or defined benefit plan). I took my “vested” benefits and used an annuity premium estimator on a couple of annuity sales/insurer websites to get a value.
This assumes I don’t accrue any more benefits and that I start drawing on the annuity at 65. I provided my birth date (so they can estimate my longevity). The calculators did not share their assumptions, but two calculators both came up with estimates of ~$106,000.
That’s probably a conservative estimate of the value, as as these are quotes to sell me a fixed annuity (with a built in assumption of profit for the seller of the annuity).
One thing to note is that the current value of these type of annuities goes up when rates go down (because the “discount rate” is related to what the issuer can earn on the premium you pay upfront and from which they pay you back in the future). So, even through I accrued more benefits by working another year, since rates went up bigly, this figure went down.
To sum that up, we’ve got $437,000 (stonks and bills) + $160,000 (RE equity) + $106,000 (deferred comp). So, my 12/31/22 guesstimate of my net worth is $703,000.
That’s basically zero change from my $708,000 estimate at the end of 2021. My investments have not increased much despite pretty strong savings efforts. I knocked about $40K off the estimate for my annuity and the real estate equity estimate was basically unch.
I suppose this is good enough for a conservative guess. Kind of disappointing as I saved a lot of money last year relative to my income. They spike in rates really knocked down the value of the future income stream and stock declines also ate a big portion of my savings contributions. Oh well, I suppose there’s nothing you can do except swim as ably as you can no matter what the current is doing.
Speaking of currents, we’ve got some life changes happening in my family. My next post is going to be about my 2023 savings goals. I’m modifying them for a bit so we can deal with some (positive) changing circumstances.
Thanks for reading!