All the Numbers

Net worth, as the plan counts it

From the All the Numbers wiki · The plan itself

Net worth is the one number the plan's charts follow year by year. It is what is owned minus what is owed, at the end of each year. The definition matters because several things a person might expect to be subtracted are not.

The rules

net worth = assets − liabilities

Assets, counted at their balance:

  • cash and savings
  • every investment account: TFSA, RRSP, FHSA, RESP and non-registered
  • each home, at its estimated market value rather than what was paid
  • tax refunds that have been earned but not yet received

Liabilities, subtracted:

  • each mortgage balance
  • lines of credit the plan has drawn on; see borrowing when short
  • other debts entered in the plan
  • income tax owing that is not yet paid, which settles the following April

What the engine does

  • Keeps the books as double entries, so net worth is the sum of what is held less the sum of what is owed. Nothing is counted twice, and money moving between accounts does not change it.
  • Carries a home at what was paid for it, then adds the difference between its market value and that cost, so the figure shown is at market. Market value grows at the plan's home price rate; see home prices.
  • Counts a registered account at its full balance. An RRSP balance is shown before the tax that withdrawing it would cause, and an unsold non-registered gain is shown before the tax on selling it. See capital gains. Where the cost base is left blank it is taken as the opening balance, so no gain that built up before the plan is counted.[1]
  • Does not subtract the costs of selling a home; see selling a home. They are charged in the month a sale happens, and not before.
  • Can restate any year's net worth in today's dollars. The spread of possible values is shown by Monte Carlo, and the effect of a bad event by stress tests.

What it deliberately does not

  • It does not show an after-tax or liquidation value. A figure that deducted deferred tax and selling costs would be lower, more so for a large RRSP or a home.
  • It does not count the present value of future pensions such as CPP or OAS. They appear as income when paid, not as an asset.
  • It does not count a person's future earnings, a home's contents or other belongings.
  • It counts an RRSP or RRIF at its full balance, before the tax due on it. The plan's last year shows the tax on the final return and what is left after it.
  • The rent-versus-buy comparison is the exception. It reports each side's position after selling costs, debt and the tax a sale that year would cause.

See also

  • Capital gains and the adjusted cost base · Selling an investment for more than its adjusted cost base is a capital gain, and half of it is added to taxable income in the year of the sale. Growth that has not been sold is not taxed.
  • Contributions the plan could not fund in full · Each month's leftover joins cash, and each contribution takes what cash can give it, in the order the accounts are listed. A contribution that cash cannot cover is funded in part rather than by an overdraft that does not exist, and the plan says so.
  • Events outside the plan's horizon · An event, purchase or sale dated before the plan starts or after it ends is ignored rather than clamped into range, and the plan says which one it dropped.
  • Expected returns and fees · The default return is 6.35% a year, nominal and net of fees, for an 80/20 stock and bond portfolio. It is an expected long-run average, not a forecast, and an account's own rate replaces it.
  • Home prices over time · A home's value is projected by growing it at one assumed rate, 3.5% a year by default, which is PWL Capital's 1% real return on a house plus 2.5% inflation. It is an editable assumption, not a forecast, and the Simulation view shows how widely a real home's value varies around it. A home added to a plan starts at $600,000 with 20% down until you enter its own figures.
  • How a mortgage payment is worked out · A fixed-rate Canadian mortgage compounds its interest twice a year, not monthly, so the monthly payment comes from a rate slightly lower than the quoted rate divided by twelve. The default rate is 4.27%, and the rate stays fixed for the whole amortization.
  • Inflation and today's dollars · The default inflation rate is 2.5% a year. A future dollar amount can be shown as is, or divided by (1 + inflation) for each year to show what it would buy today.
  • Money you have not told the plan to invest · Income the plan does not spend and you have not allocated to an account is held as cash, earning the posted savings rate. It is not swept into an investment account, and it never over-fills a registered one.
  • Monte Carlo: many market histories · The Simulation page runs the plan 500 times with investment returns and home prices drawn at random each year, then shows the spread of net worth and how many runs finish, borrow or run out of money.
  • Old Age Security · A monthly pension paid to most Canadians from 65, based on years lived in Canada after 18. It can be deferred for a permanent increase, rises 10% at 75 and is partly repaid through a recovery tax at high incomes.
  • Renting versus buying · All the Numbers compares a plan that buys a home with the same plan that never buys, and the money the home would have taken stays in your accounts and is saved like any other leftover cash. It shows when owning pulls ahead on net worth, if it does. It is a comparison under assumptions, not a verdict.
  • Retirement age · The age at which a person's pay stops in the plan, 65 unless you give another. Their monthly contributions stop then, and an RRSP becomes a RRIF at 71.
  • RRSP room, deduction and withdrawals · Room accrues at 18% of earned income up to the annual cap, contributions earn a deduction refunded the following April, and withdrawals are taxed as income. The plan assumes you start with no carried-forward room unless you say otherwise.
  • Scenarios and life events · The Scenarios page lets you drop dated events onto a copy of your plan, such as a job loss, a market drop or a rate jump, and see where net worth ends up. Each event is a change to the plan run through the ordinary projection, not a separate calculator.
  • Selling a home · A sale turns the home's projected market value into cash after selling costs (your province's typical commission, the sales tax on it and legal fees) and the mortgage payout. The gain on a principal residence is exempt from tax, apart from the part that was rented out when the exemption does not cover it.
  • Stress tests · A stress test reruns the whole plan with one thing made worse, such as a higher mortgage rate at renewal or a year of lost income, and reports how far final net worth moves and whether the plan still pays its bills. It carries no probabilities.
  • Tax on the final return · What the plan's last year would owe in tax if the household died then, and how much of the savings would be left after it.
  • TFSA contribution room · Room starts accruing the year you turn 18, not the year you open an account, and it never expires. Withdrawals come back the following January. Limits past 2026 have not been announced, so the plan projects them by the rule the Act sets and says so.
  • The CPP retirement pension · A monthly pension from the Canada Pension Plan based on contributions, payable from 60 to 70. Starting earlier cuts it by 0.6% a month, starting later raises it by 0.7% a month. The plan estimates it from a Service Canada statement or from salary.
  • The First Home Savings Account · $8,000 a year with one year of carryforward and $40,000 for life, deducted from income and withdrawn tax-free for a first home. The refund is credited the following April, and the account winds up into an RRSP if it is never used.
  • When the plan runs short of cash · When a month needs more money than the plan has, it draws savings in a set order, then borrows on a home equity line at 5.13% and an unsecured line at 8.38%, as far as a lender would lend. When no lender would lend more, the projection stops.

References

  1. ↑CRA — adjusted cost base definition (Line 12700) · A non-registered account whose adjusted cost base is left blank on the planner form has its ACB taken as equal to its opening balance — no unrealised gain at the start; every gain the plan reports on that account is growth inside the plan, and any gain accrued before it is left out · effective 2026-09-21