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Wealth status self-evaluation

Updated: Jul 16, 2022

In order to help people evaluate current wealth status, and estimate if they have achieved the minimum requirements for financial freedom or retirement, the project team has developed a set of self-evaluation worksheets.

Wealth self-evaluation
Download XLSX • 31KB

Here is a brief instruction of how to best use this self-evaluation.

  1. There are 4 sections for this self-evaluation: Income Statement, Balance Sheet, Financial Freedom, and Retirement. Shaded cells are automatically calculated, so you can't change those cells. For the other cells, you can type 0 or a positive number into the cells. Black numbers stand for positive numbers while red numbers stand for negative numbers (but you have to type 0 or positive numbers). Those worksheets are already filled with some numbers, that would help you understand how to fill in your own numbers.

  2. The first tab is for personal income statement, including all your annual income and expenses. The net annual income should be positive. Otherwise, you can't save money for retirement.

  3. The second tab is for personal balance sheet, including all your assets and liabilities. The net assets should be positive. Otherwise, you are net debt and may go bankruptcy. Please note that you can only include 50% of the market value for your primary residence into your total assets, because that's usually the max value you can get from reverse mortgage.

  4. The third tab is for evaluating if you have achieved financial freedom. All cells are automatically calculated. You only need to look at the last cell "If Meeting Financial Freedom Requirements". If the result is "Yes", congratulations you have achieved financial freedom; if the result is "No", you can think of how to repay all your bad debts first. This evaluation is only for the people who are still working. If all of your income is from investments or inheritance, this evaluation may not be working for you.

  5. The fourth tab is for evaluating if you can have a worry-free retirement. Just type in your age, pension and other income, and all the other cells will be automatically calculated. You only need to look at the last cell "If Meeting Retirement Requirements". If the result is "Yes", congratulations you can retire now; if the result is "No", you can think of saving more money for later retirement. This evaluation is for the people who are at retirement age or are approaching retirement. If you are planning for early retirement, please don't include pension income.

  6. There are some differences between financial freedom and retirement. Achieving financial freedom requires more income to cover all your expenses. Basically, you don't need to sell any assets. Just the income from those assets is enough for a living. But for retirement, you may need to sell those assets to cover expenses, and there may not be many assets left in the end. If you have already achieved financial freedom, you don't need to look at the retirement section anymore.

  7. There are also some assumptions for this to work: the investment return from your assets should be greater than the inflation rate for both situations (financial freedom or retirement). Property income or pension income should be good enough for hedging against inflation. But for other assets or income, you have to make sure they can offset the impact of inflation.

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