It’s time for another net worth update, the February edition. After a brief warm up, it seems we’ve been in for an endless winter here in the Northeast, with nothing really changing and snowstorm after snowstorm. Possibly a good comparison to the current market situation as well? This month will be a first for me, but you’ll have to continue to read below to see exactly what that first was.
Here is my net worth after February:
It’s my first month to have a negative change for net worth, so that was a little disheartening. You can see the bulk of the drop was from my old 401k and my Roth IRA though, two accounts that I don’t have much control over.
The important thing to focus on was that my savings rate was still positive, and across all of the accounts that I can control I was able to post gains. The market is what really dragged me down, and it’s been up and down since that point. Right now we’re basically at the same levels we were at back in January, so at least that is an encouraging sign.
So let’s see how far my assets would actually take me at this point in time. I’m going to calculate that using my average spending over the last 12 months. I’ll then multiply that by 12 months to get the total spending for the year, and then divide my total net worth by that amount. That’s how long I’d be able to live off my savings at that point in time.
$2519 average spending last 12 Months * 12 Months = $30,228 spending in a year
$128,802 net worth / $30,673 spending per year = 4.20 years worth of spending
Once again it’s essentially flat like the previous two months, with a slight bump in spending and a decrease in my net worth Results were expected!
I also thought it would be cool to see the opposite, how much would I be able to withdraw each month? I set the rate of return at 4% as a conservative guess, and the retirement time period would be for 30 years.
I’d be able to withdraw $613 a month for 30 years which is 24.3% of my average monthly spending.
Stretch goal of being able to cover 35% of my spending might be tough if the market continues this way. I’ll keep saving and remain optimistic though, we’ll see what happens! I’ve already been running the numbers for March net worth update, so it shouldn’t be nearly as delayed. I also don’t expect it to be negative next month, even if the market has mostly been flat! Hopefully I’ll at least see a small increase.