Important Notice
This guide is general education, not personalized advice. The household in the example is hypothetical, and the tax rates used to estimate after-tax values are assumptions; your own rates will differ.
During your working years, net worth measured progress. After you stop working, it answers harder questions. Can this last? How much of it is really mine after tax? What will my spouse have, and what will the children inherit?
A retiree's balance sheet looks different from a young family's. There are no student loans and usually no mortgage on the main home. Instead there are large pre-tax IRAs, a paid-off house, perhaps a second home or a pension, and decisions about how each will be spent or passed on.
The Formula Has Not Changed
Everything you own minus everything you owe. What changes in retirement is what goes in each column, and whether you count it before or after tax.
Key Takeaways
- •Keep two totals: gross net worth, and after-tax net worth with IRAs, unrealized gains and selling costs taken out.
- •Track Social Security and pensions as income beside the balance sheet, not inside it.
- •Median net worth was $409,900 at 65 to 74 in 2022 (Federal Reserve); medians say little about a household with $2 million or more.
- •Withdrawal rate, liquidity, pre-tax share and home concentration tell you more than the total.
- •Update it once or twice a year and after major events. A slow, planned decline is normal.
Why Does Net Worth Still Matter in Retirement?
Because it is the one document that connects your income plan, your tax plan and your estate plan. A retiree with $3 million who spends $250,000 a year is in a weaker position than one with $1.5 million who spends $60,000, and only a balance sheet read alongside spending shows it.
It tests whether the plan is working
Compare each year’s investable assets with your withdrawal projection. Falling faster than planned is the early warning.
It shows your tax exposure
A household that is 70% pre-tax IRAs faces large required minimum distributions and a tax bill for heirs. That shapes Roth conversion and withdrawal decisions.
It frames long-term care decisions
Whether to self-insure, buy coverage, or plan on the house funding care depends on what is liquid and what is not.
It is the starting point of the estate plan
An executor or surviving spouse needs to know what exists, where it is and who inherits it. A current balance sheet is the single most useful document you can leave.
What Belongs on a Retiree Balance Sheet?
Everything you could sell, spend or leave to someone, at a realistic value, and every debt. Group assets by how they are taxed, because that is how you will draw on them.
Always include
- • Cash and Treasuries: checking, savings, money market, T-bills, CDs
- • Taxable brokerage: market value, with cost basis noted
- • Pre-tax accounts: traditional IRAs, 401(k)s, 403(b)s, inherited IRAs
- • Roth IRAs and HSAs
- • Main home: a conservative market value
- • Other real estate: second home, rentals, land
- • Every debt: mortgages, HELOCs, margin loans, cards, taxes owed
Include with care
- • Annuities: the surrender value, not the contract value
- • Life insurance: cash surrender value only
- • A business: a realistic sale value, net of debt
- • Collectibles, jewelry, art: only with an appraisal
- • Vehicles: a low resale value
- • Loans to family: only if you truly expect repayment
Track beside the balance sheet, not in it
- • Social Security and pensions: record the monthly amounts and survivor percentages. They are income streams, not saleable assets.
- • Long-term care insurance: note the daily benefit and the benefit period.
- • Expected inheritances: leave them out until received.
- • Household furnishings and personal items: skip them unless unusually valuable.
Add one more column that most templates lack: the named beneficiary or how each asset is titled. It shows at a glance what passes by beneficiary form, what goes through probate, and what an estate attorney should look at. Our estate planning guide explains why that matters.
Should You Count Net Worth Before or After Tax?
Both. The gross number is what your statements show. The after-tax number is what you, your spouse or your heirs can actually spend. For retirees with large traditional IRAs, the gap is often hundreds of thousands of dollars.
- Traditional IRAs and 401(k)s: reduce by the rate you expect to pay on withdrawals. Heirs usually pay their own rate within ten years; see our inherited IRA guide.
- Taxable accounts: reduce by the tax on unrealized gains if sold. Heirs generally receive a new cost basis at death, so for assets you plan to leave, this deduction may never be paid.
- Roth IRAs and HSAs used for medical costs: no deduction.
- Real estate: reduce by selling costs and any tax on gain above the home sale exclusion.
Seen this way, a Roth dollar is worth more than a traditional IRA dollar, and paying tax on a Roth conversion does not make you poorer as much as the gross balance suggests. Our guide to Roth conversions before RMDs uses exactly this view.
What Does a Retiree Balance Sheet Look Like?
Take a hypothetical couple, Richard (70) and Anne (68). They retired five years ago, own their home and a lake cabin, and have three grown children and five grandchildren.
| Item | Value | Titled / beneficiary |
|---|---|---|
| Checking, savings and Treasury bills | $150,000 | Joint |
| Taxable brokerage (cost basis $300,000) | $650,000 | Joint, TOD to children |
| Traditional IRAs | $1,450,000 | Each names the other, then children |
| Roth IRAs | $220,000 | Each names the other, then children |
| HSA | $35,000 | Anne; Richard as beneficiary |
| Home | $900,000 | Revocable trust |
| Lake cabin | $350,000 | Revocable trust |
| Cars | $30,000 | Joint |
| Life insurance cash value | $60,000 | Richard; Anne as beneficiary |
| Total assets | $3,845,000 | |
| Cabin mortgage and credit cards | −$94,000 | |
| Gross net worth | $3,751,000 |
From gross to after-tax
- Gross net worth
- $3,751,000
- Less: tax on IRAs at an assumed 24%
- −$348,000
- Less: tax on $350,000 of unrealized gains at 15%
- −$52,500
- Less: selling costs on real estate at an assumed 6%
- −$75,000
- After-tax net worth
- $3,275,500
Investable assets
$2,505,000
Annual portfolio withdrawal
$90,000
Withdrawal rate
3.6%
The picture that emerges: comfortably funded, with nearly 60% of investable assets in pre-tax IRAs, which argues for Roth conversions before RMDs grow; about a third of net worth in two houses; and an estate well below the $15 million federal exclusion for 2026. The cabin is the family's most emotional asset and its least liquid one. Those observations are worth more than the total.
How Does the Balance Sheet Change at the First Death?
The total may barely move, but almost everything underneath it does. That is why it is worth sketching the survivor's balance sheet while both spouses are alive.
- Income falls. Only the larger of the two Social Security benefits continues, and a pension may drop to its survivor percentage. The same assets must now cover a larger share of spending.
- Taxes rise. After the year of death, the survivor usually files as single, with brackets and a standard deduction about half the joint amounts, while RMDs on the inherited IRAs continue.
- Cost basis resets. Jointly owned taxable holdings generally get a new basis on the deceased spouse's half, and in community property states generally on the whole (IRS Publication 551). Unrealized gains, and the after-tax deduction for them, shrink.
- Titling matters. Accounts with named beneficiaries pass directly; others may need probate or a trust. The beneficiary column on your balance sheet shows which is which.
Our life insurance guide works through a survivor-income example, and the Social Security timing guide explains how delaying the larger benefit protects the survivor.
What Is Typical Net Worth by Age?
Lower than many readers here would guess, and very unevenly spread. The Federal Reserve's Survey of Consumer Finances is the standard source.
| Age | Median | Mean |
|---|---|---|
| 55–64 | $364,500 | $1,566,900 |
| 65–74 | $409,900 | $1,794,600 |
| 75 or older | $335,600 | $1,624,100 |
Source: Federal Reserve, “Changes in U.S. Family Finances from 2019 to 2022”, 2023. Values in 2022 dollars.
The gap between the median and the mean tells the story: a minority of households hold most of the wealth, pulling the average far above the typical family. If your net worth is several million dollars, you are well above the median at any age, and the median is not a useful benchmark. Compare yourself instead with your own spending and your own plan.
Notice too that the median is lower after 75. That is not failure; it is retirement working as intended. Our savings by age guide has more benchmarks, and how much you need to retire covers the test that matters.
Which Ratios Matter More Than the Total?
Five numbers, each computed from the same balance sheet, tell you more than net worth alone.
| Ratio | How to compute it | What to watch for |
|---|---|---|
| Withdrawal rate | Annual portfolio withdrawal ÷ investable assets | Above about 4% early in retirement deserves a closer look |
| Liquidity | Cash and short-term bonds ÷ annual withdrawal | Fewer than 1 to 2 years leaves you exposed to a forced sale |
| Pre-tax share | Traditional IRAs and 401(k)s ÷ investable assets | A high share signals large RMDs and taxes for heirs |
| Home concentration | Real estate equity ÷ net worth | Over half makes the house your care and income plan |
| Estate vs. exclusion | Net worth plus life insurance ÷ federal and state thresholds | Near a threshold, plan with an estate attorney |
The first two are the ones to recheck every year. The withdrawal calculator tests whether your rate is sustainable, and the retirement cash guide covers liquidity.
How Often Should You Update It?
Year-end
The main update, from December statements. Pairs with RMDs, rebalancing and tax planning.
Mid-year
Optional check-in, useful before a Roth conversion or a large gift.
After major events
A death, a home sale, an inheritance, a move into care, or a large gift to family.
Tools
- • A spreadsheet: full control and no data sharing. Our personal financial statement template has the retiree layout above.
- • Our net worth calculator: a quick total without linking accounts.
- • Account aggregators: convenient, but they require your logins; weigh that against the fraud risk.
Leave a copy where it will be found
Print the year-end balance sheet, with custodians, account types and beneficiaries but not passwords, and keep it with your will and powers of attorney. Tell your executor where it is. It will save your family weeks.
Frequently Asked Questions
What is the median net worth for people 65 to 74?
In the Federal Reserve’s 2022 Survey of Consumer Finances, median net worth was $409,900 for families headed by someone 65 to 74, $364,500 for ages 55 to 64, and $335,600 for 75 and older. The means were far higher, about $1.6 million to $1.8 million, because a minority of households hold a large share of the wealth. Medians are a poor benchmark for anyone whose spending or portfolio is well above average.
Should I count my IRA at full value in my net worth?
Count it both ways. The gross balance is what your statements show, but every dollar withdrawn from a traditional IRA or 401(k) is taxed as ordinary income, so part of it belongs to the government. Keeping a second, after-tax line, with IRAs reduced by your expected tax rate, gives a truer picture and makes a Roth dollar and a traditional dollar comparable.
Should Social Security and pensions count in net worth?
Not in the main total. They cannot be sold, borrowed against or left to heirs in the usual way. Track them as income beside the balance sheet instead. What they do change is how much of your net worth needs to produce income: a large pension lets more of the portfolio take risk or pass to heirs.
How often should retirees update their net worth?
Once or twice a year is enough for most retirees; year-end statements make December the natural time. Update it too after a major event such as a death, a home sale, an inheritance or a move into care. Watch the trend and the key ratios, not month-to-month swings.
Is it normal for net worth to fall in retirement?
Yes. Spending down savings is the purpose of saving. What matters is whether the decline matches your plan. In the Federal Reserve data, median net worth is lower for families 75 and older than for those 65 to 74. Compare each year’s figure with a projection from a withdrawal calculator; a portfolio falling faster than planned is the signal to adjust.
The Bottom Line
In retirement, a balance sheet is a planning tool, not a scoreboard. List every asset by how it is taxed and titled, keep a second after-tax total, track guaranteed income beside it, and read the ratios each year. A slow, planned decline is success. A surprise is the signal to act.
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