Retirement Planning Starts With Knowing Your Net Worth

Most retirement advice jumps straight to tactics — max out your 401(k), open a Roth IRA, pick low-cost index funds. All good advice. But it skips the most important first step:

Know where you stand right now.

Your net worth is the single best snapshot of your retirement readiness. It tells you how far you've come, how far you have to go, and whether your current strategy is actually working.

Why Net Worth Is the Foundation

Retirement planning is ultimately a net worth problem. The day you retire, your paycheck stops. From that point forward, your lifestyle is funded entirely by what you've accumulated — your net worth.

That means every retirement question reduces to the same thing:

• Can I retire at 60? → Depends on your net worth at 60.
• Will I run out of money? → Depends on your net worth vs. your spending.
• Should I take Social Security early? → Depends on your net worth and how long it needs to last.

Income matters during your working years, but net worth is the scoreboard that tells you if you're winning.

The Accounts That Build Retirement Wealth

Not all net worth is created equal when it comes to retirement. Tax-advantaged accounts are the single biggest lever most people have.

401(k) / 403(b)

Your employer-sponsored plan is often the easiest place to start. In 2026, you can contribute up to $23,500 ($31,000 if you're 50 or older). If your employer matches contributions, that's free money — an instant 50-100% return on every dollar matched.

Net worth impact: A $23,500 annual contribution growing at 8% for 30 years becomes roughly $2.8 million. The employer match can add hundreds of thousands more.

Traditional IRA

Contributions may be tax-deductible, and your investments grow tax-deferred. The 2026 limit is $7,000 ($8,000 if 50+). It's a strong complement to a 401(k), especially if your employer plan has limited fund options. You can open a Traditional IRA at brokerages like [Fidelity][AFFILIATE_LINK_PLACEHOLDER:fidelity], [Schwab][AFFILIATE_LINK_PLACEHOLDER:schwab], or [Vanguard][AFFILIATE_LINK_PLACEHOLDER:vanguard] with no account minimums.

Roth IRA

You contribute after-tax dollars, but withdrawals in retirement are completely tax-free — including all growth. If you expect to be in a higher tax bracket later (or if tax rates rise over the coming decades), the Roth is incredibly powerful.

Pro tip: Young earners in lower tax brackets should strongly consider Roth contributions. Decades of tax-free compounding is one of the best deals in personal finance. Opening a [Roth IRA at Fidelity][AFFILIATE_LINK_PLACEHOLDER:fidelity] or [Schwab][AFFILIATE_LINK_PLACEHOLDER:schwab] takes about 10 minutes.

HSA (The Stealth Retirement Account)

If you have a high-deductible health plan, a Health Savings Account offers triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. After age 65, you can withdraw for any purpose (taxed like a traditional IRA). It's the most tax-efficient account available.

The 4% Rule: Your Net Worth Target

The most widely used retirement guideline is the 4% rule: you can safely withdraw 4% of your portfolio in your first year of retirement, then adjust for inflation each subsequent year, with a high probability of your money lasting 30+ years.

This rule gives you a simple formula:

Annual expenses × 25 = Your target net worth

Annual Spending	Target Net Worth
$40,000	$1,000,000
$60,000	$1,500,000
$80,000	$2,000,000
$100,000	$2,500,000

If you spend $60,000 per year in retirement, you need roughly $1.5 million in invested assets. That's your number. Everything else — contribution rates, asset allocation, timeline — flows from that target.

The 4% rule isn't perfect. Some financial planners suggest 3.5% for early retirees or conservative projections. But it's a solid starting point that turns the vague idea of "enough" into a concrete net worth goal.

Target Net Worth by Age

While everyone's situation is different, these benchmarks give you a rough framework based on the goal of retiring by 65:

• Age 30: 1× your annual salary saved
• Age 35: 2× your annual salary
• Age 40: 3× your annual salary
• Age 45: 4× your annual salary
• Age 50: 6× your annual salary
• Age 55: 7× your annual salary
• Age 60: 8× your annual salary
• Age 65: 10× your annual salary

Behind schedule? That's not a reason to panic — it's a reason to track more closely, increase savings rate, and reduce unnecessary spending. The awareness alone changes behavior.

How Tracking Accelerates Retirement Readiness

Here's something most people don't expect: the act of tracking your net worth makes you wealthier.

Research consistently shows that people who monitor their finances save more, invest more consistently, and make fewer impulsive purchases. It's the financial equivalent of stepping on the scale — awareness drives better decisions.

When you track your net worth monthly, you:

• Spot lifestyle creep before it erodes your savings rate
• See compounding in action, which motivates you to stay invested during downturns
• Catch problems early — a creeping credit card balance, a forgotten subscription, an underperforming account
• Stay connected to your "why" — that retirement date feels real when you can see the line trending upward

Without tracking, retirement is an abstract future event. With tracking, it's a destination with a clear progress bar.

Don't Overcomplicate It

You don't need a financial advisor, a spreadsheet with 47 tabs, or an MBA to plan for retirement. You need three things:

1. Know your number — Use the 4% rule to calculate your target
2. Know where you stand — Calculate your current net worth
3. Close the gap — Save and invest consistently, and track your progress

The gap between #2 and #1 is your retirement plan. Everything else is detail.

Make Tracking Effortless

A comprehensive net worth tracker pulls all your accounts — 401(k)s, IRAs, brokerage accounts, savings, real estate, and debt — into a single dashboard. You'll see exactly where you stand, how you're trending, and how close you are to your retirement number.

No spreadsheets. No guesswork. Just clarity.

The Bottom Line

Retirement planning doesn't start with picking stocks or choosing funds. It starts with knowing your net worth and setting a clear target.

Every dollar you save, every debt you pay off, and every investment return moves you closer to the day when work becomes optional. Track the number that matters, and retirement stops being a distant dream — it becomes an inevitable destination.

---

Some links in this article are affiliate links. We may earn a commission if you open an account, at no extra cost to you. We only recommend products we genuinely believe in.

Keep Reading

• The FIRE Movement: A Net Worth Approach to Financial Independence
• Tax Strategies That Actually Grow Your Net Worth
• Net Worth Milestones: From $0 to $1M