January is a good month to assess overall financial performance and track yearly progress toward retirement. Today I did just that.
So let’s summarize how we did. Our total net worth increased by 4.91% over the second half of the year. I am satisfied with this because during this period, we closed on the purchase of our condo. This caused us to burn through some cash, converting some of it to equity and some used to buy furniture and supplies. Fortunately, the condo appraised for more than our purchase price.
The total value of our retirement assets increased 7.39%. This is from a combination of additional retirement account contributions and increases in the market value of our investments. I am still fine tuning my spreadsheet so that it will accurately display the internal rate of return for each of our investments. At this point, I remain pleased with the non-correlated performance of the core holdings in my 401(k) account. We bought some TIPS in the last half of the year and intend to buy more in 2011, as part of our guaranteed retirement income plan.
Another metric I want to use to track progress toward retirement is the value of our retirement portfolio if it were annuitized into monthly retirement income for life. I ran those numbers at the end of the year and will check them again monthly. This annuity income metric will reflect a combination of annuity returns and changes in the value of our retirement nest egg.
Do you track your financial performance in a similar way? Thoughts and suggestions for me?