Net worth and retirement savings

At the beginning of every month, I tally up my assets and liabilities, and calculate three financial snapshot numbers:

• Net Worth - This is my total assets, including home, car, retirement investments, and liquid savings, minus my total debts, including mortgage, revolving debt, and student loans. I use this to represent my "full" financial picture, and it tells me how much I really "own".


• Net Investable Assets - This is my total financial assets, including retirement investments and liquid savings, minus my total non-mortgage debt, including revolving debt and student loans. This represents my full financial picture in monetary terms, and basically tells me how much money I really have available, without selling off possessions like our home or our car.


• Net Liquid Assets - This is my total liquid savings, minus my total non-mortgage debt, including revolving debt and student loans. This represents my full financial picture in liquid monetary terms, and basically tells me how much money I really have immediately available, without liquidating my retirement savings or selling off possessions like our home or our car.

There's a lot of talk about exactly what assets belong in the calculation of net worth. This discussion seems to center around how you intend to "use" your net worth number. For example, if you want the number to express how much money you really have on hand today, then you probably won't consider your home as an asset (or your mortgage as a debt), since your plans likely don't include liquidating your home for extra cash. If, on the other hand, you want the number to represent your progress toward early retirement, then you likely would include your home (and mortgage), as well as your retirement investments.

I've seen some people estimate the tax penalty they would pay for immediately liquidating their retirement savings, and enter the post-penalty balance remaining as an asset in their net worth. This helps to represent retirement savings as a "right now" number. If you were facing financial ruin, and needed to liquidate everything you own, then you might very well sell your home and take the tax hit for cashing in your retirement savings.

This has got me thinking about my own calculations. I currently include my retirement accounts in my net worth and net investable assets, but not in my net liquid assets. I'm wondering if it makes sense to include an after-penalty retirement balance in my net liquid assets, to represent my total "immediate cash available".

I realize that most of the value in tracking net worth comes from keeping the calculation the same, and watching the trend over time that results from your financial behaviour. Therefore, it would seem that I'm better off keeping things as they have been, and excluding retirement accounts from net liquid assets. I still think I'll work out the after-tax balances, however, to feed my own personal hunger for data.

What do you do? How do you account for your retirement savings when figuring your net worth?