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No. of Recommendations: 7
It's difficult to impossible to gauge current wealth (net worth) to income over ones working years. The simplified equation given ignores time value of money (inflation), income other than wages, the form of assets (closely held stock, partnership book value, private partnerships, real estate, outstanding contracts), current debt obligations, liquidity (ability to convert assets into cash), tax obligations on tax deferred assets) and so on.

A simpler ratio is net liquid assets (cash and assets that can readily be converted to cash) divided by fixed expenses (interest, costs of ownership, core costs of living). The greater this ratio above 1.00, the better!

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