Todd Moerman brings some excellent points in this article.
Time to take action!
A good starting point for investors to gauge net worth (NW) is to find out how he or she is doing compared to other investors. At my firm, we like to benchmark. We compare clients and potential clients to other millionaires to provide data driven feedback. Using a simple formula, find out if you are above or below your personal projection for net worth. Click here to find out how to calculate your projected net worth index.
Keep in mind that your personal benchmark is a starting point (based on your age and earnings) to become a better accumulator of wealth. You should care most about the trend of your net worth. We suggest that you track and monitor your net worth yearly, at minimum.
Here are the 7.5 Dangers that can destroy your net worth (NW):
1. Not saving enough! Given the current environment for investing, we suggest that you save 12% to 20%+ of gross household income (before taxes) on a yearly basis. This includes 401k, company match, IRA and taxable accounts. If your actual NW is less than your projected NW, you might want to save closer to 20%+.
2. Poor health! Your health is the foundation to your retirement. In a recent 2011 Retirement Confidence Survey, 70% of current workers plan to work past age 65. Actual experience of retirees shows that only 28% work past age 65. The top reasons are: 65% are unable to keep working do to health or disability problems. 23% stop working due to company downsizing and 18% stop to care for another family member or spouse. If you retire in 2020, the projections are that you will need at least $350k to cover 90% of your projected medical expenses.