Yes, net worth does include retirement accounts. Every balance in a 401(k), IRA, 403(b), or similar plan is an asset you own, and it belongs on the asset side when you subtract what you owe from what you have. The catch: the number printed on your statement is not always the number you would actually pocket. Taxes and early-withdrawal penalties can make a pre-tax retirement balance worth noticeably less in spendable dollars than it looks.
Why Retirement Accounts Are Assets
Retirement accounts belong to you. Whether the plan is a 401(k) through an employer, a Traditional or Roth IRA you opened on your own, a 403(b) at a nonprofit, or a plan for the self-employed, you hold legal ownership of the funds and control the investments inside.1Internal Revenue Service. Types of Retirement Plans The money can be withdrawn, transferred, or inherited. Those are the hallmarks of an asset.
Restricted access does not disqualify something from your net worth. Home equity is illiquid too, and nobody argues a house should be left off the list. Retirement balances work the same way. They are real economic value you have built up, even if turning them into cash takes time or costs money.
Roth Accounts and Traditional Accounts Are Not Worth the Same
Not every retirement dollar is equal after taxes, and this is where the statement balance can mislead you.
Qualified distributions from a Roth IRA are completely tax-free and are not included in gross income.2Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements A Roth IRA showing $100,000 is worth $100,000 in spendable money, assuming the distribution qualifies. To qualify, the account must have been open at least five years, and you must be at least 59½, disabled, or using the funds under another qualifying exception.3Internal Revenue Service. Traditional and Roth IRAs
Traditional 401(k) and Traditional IRA balances have never been taxed. Every dollar you eventually withdraw counts as ordinary income. That embedded tax bill means the statement balance overstates what you will actually receive. How much it overstates depends on your bracket at the time of withdrawal.
Adjusting Pre-Tax Balances for Taxes and Penalties
Many financial planners apply a discount to traditional retirement account balances to reflect the taxes that will eventually come due.
In 2026, the 22% federal bracket applies to single-filer income above $50,400, and the 24% bracket kicks in above $105,700.4Internal Revenue Service. Tax Inflation Adjustments for Tax Year 2026 If you expect to withdraw funds in one of those brackets, a $100,000 traditional IRA balance is roughly $76,000 to $78,000 in after-tax spending power. State income tax would reduce it further. A discount of 20% to 35% on pre-tax retirement balances is a reasonable range, depending on your combined federal and state rates.
Withdrawing from a traditional account before age 59½ triggers an additional 10% penalty on top of ordinary income tax.5Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts For someone in the 24% bracket who also pays the penalty, a $100,000 account can shrink to around $66,000 or less. If you are under 59½ and trying to gauge what your retirement accounts are actually worth to you right now, that penalty makes the discount considerably steeper.
Count Only the Vested Portion of Employer Contributions
If your employer matches your 401(k) contributions, part of that match may not fully belong to you yet. Most employer-sponsored plans use a vesting schedule that gradually increases your ownership of employer contributions over several years. Leave before you fully vest, and you forfeit the unvested portion.
For net worth purposes, count only the vested balance, meaning the amount you would actually walk away with if you left your job today. Your own contributions and their earnings are always 100% vested. The employer match depends on your plan’s schedule, which your account statement or plan administrator can confirm.
Other Retirement-Related Items and Whether They Count
Health Savings Accounts
An HSA balance is an asset and belongs on your net worth statement. HSAs offer a triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After age 65, you can withdraw HSA funds for any purpose, though non-medical withdrawals are taxed as ordinary income much like a traditional IRA. There are no required minimum distributions, so the money can stay invested indefinitely.
Pensions
A defined-benefit pension is a future income stream, not a lump-sum balance. To include it on a net worth statement, you convert the expected monthly payments into a present value, a single number representing what that stream is worth today. Financial planners typically apply a present value of annuity calculation with a discount rate around 4% to 5%, factoring in your expected retirement age and life expectancy. If your plan offers a lump-sum buyout option, that figure is a ready-made estimate.
Social Security
Social Security benefits are generally not included in a personal net worth calculation. It is a government benefit rather than an asset you own, and it can be modified by legislation. You cannot sell it, transfer it, or borrow against it. Some people calculate its present value separately to see its role in their overall retirement picture, but standard convention leaves it off.
Inherited Retirement Accounts
An inherited IRA or 401(k) counts as an asset on your net worth statement, but the distribution rules affect its long-term value. Most non-spouse beneficiaries who inherited an account from someone who died in 2020 or later must empty the account within 10 years of the owner’s death.6Internal Revenue Service. Retirement Topics – Beneficiary Forced distributions from a traditional inherited IRA are taxable income, so the same tax-discount logic applies, potentially more aggressively because the money must come out on a fixed timeline.
Spouses, minor children, disabled individuals, and beneficiaries within 10 years of the deceased owner’s age may qualify for slower distribution schedules, which changes the tax impact and the valuation.6Internal Revenue Service. Retirement Topics – Beneficiary If the deceased made nondeductible contributions to a traditional IRA, that basis carries over and reduces the taxable portion of your future withdrawals.2Internal Revenue Service. Publication 590-B – Distributions From Individual Retirement Arrangements
Gross Net Worth and Liquid Net Worth
Gross net worth adds up everything at face value: home equity, retirement balances, cars, investment accounts. Liquid net worth focuses on what you could realistically access in a short time frame without major penalties or losses.
Retirement accounts sit awkwardly between the two. They are real assets, but reaching them before retirement age costs you in taxes and penalties. A practical approach is to track both numbers. Keep a gross figure with full retirement balances for the complete wealth picture, and a tax-adjusted figure that discounts pre-tax accounts by your expected marginal rate. Roth balances need no discount when qualified withdrawals apply. Traditional balances deserve a 20% to 35% reduction depending on your bracket and whether you are old enough to avoid the early-withdrawal penalty.