Calculating yearly net worth

After the Lifetime Planner determines your cash flow for the year, it calculates your net worth at the end of the year.

To do this, the Lifetime Planner increases the value of your home and assets by the percent annual increases you've entered. They then increase the value of your investments by the percent of annual return you selected. Then they add the savings you plan to make during the year.

When the Lifetime Planner adds to your savings, they simulate saving monthly.

The Lifetime Planner reinvests all gains each year. For taxable savings, they reinvest the gain after tax. You can set the percentage of taxable investment return that will be subject to taxes in the Rate of return option. There are no taxes for tax-deferred savings, so the entire gain from tax-deferred savings plans is reinvested.

The Lifetime Planner then subtracts the balance of any loans in effect that year to determine your net worth. So your net worth is simply investments plus home plus assets minus loans.

The Lifetime Planner then calculates the cash flow and net worth for the next year.