Your Net Worth May Be Lying To You
- Susan Geist
- Jun 27
- 3 min read
We see this all of the time.
Someone thinks they’ve “made it.” They’ve crossed the magical $1 million net worth threshold, based on their 25x annual expenses Financial Independence (FI) calculations, and decide it’s time to step away from their 9-5 job.
It should feel amazing, but instead they end up trapped in a financial nightmare.
Here’s a real-world example we’ve seen unfold with our clients:
The Snapshot:
Net worth: $1 million
Assets:
$500,000 equity in a primary home
$250,000 equity in a duplex (rented, but not high cash flow)
$250,000 in pre-tax retirement accounts
On paper it looks solid. She hit the “25x annual expenses” rule and felt confident leaving full-time work. But when they stopped earning a paycheck, a few realities set in:
Her primary home wasn’t producing income, and tapping that equity was next to impossible.
The duplex cash flow dipped due to higher vacancies, a down economy, and repairs.
Her retirement accounts were mostly untouchable without penalties.
Suddenly, that $1 million didn’t feel very free.
She wasn’t broke. But she was stuck. She had assets, but little liquidity. A great net worth, but not enough cash flow. Her dream early retirement and years of saving was turning into a nightmare.
Here’s the hard lesson:Your net worth isn’t the same as your Financial Independence number.
So What Actually Counts Toward Your FI Number?
When calculating whether you can safely stop working, we look at investable and income-producing assets - not just the total on your balance sheet.
Counts towards FI Number:
Taxable brokerage accounts
Cash reserves and liquid cash-equivalent accounts
Retirement accounts (if accessible)
Other liquid investments
Doesn’t count towards FI Number:
Primary home equity
Real estate investments (cash flow can be deducted from annual income needed)
Syndications, private equity, or long-term holds that are hard to exit
Retirement accounts if you’re under 59½ (unless part of a drawdown strategy like SEPPs or Roth ladders)
Net worth can make you feel like you’ve hit freedom. But if that wealth isn’t accessible, liquid, or generating income, it might leave you short of the cashflow you need.
And I’ll be honest - I’ve made a lot of these mistakes myself.
When my husband and I left our W-2 jobs, we had what looked like a solid financial independence portfolio - but way too much of it was tied up in rental real estate, our primary home, and non-liquid syndication deals.
When the real estate market stalled, we suddenly weren’t seeing the cash flow we expected. And like many others, we had to scramble:
· Reworking our entire plan
· Selling assets
· Moving money into more liquid, accessible places
· Rethinking what financial independence really means
It wasn’t fun, but it was clarifying. (I wrote more about that quick pivot here.) And it’s part of why we’re so passionate about helping other women avoid the same trap.
If you're dreaming about early retirement - or already halfway there - we encourage you to stress-test your plan:
How much of your net worth can you actually use right now?
Do you have enough cashflow or drawdown access to cover your lifestyle?
What happens in a market downturn?
We’ve helped many clients avoid painful surprises by asking these questions before making the leap. It’s not about fear - it’s about flexibility, clarity, and control.
Because at the end of the day, we don’t just want to help women reach millionaire status on paper. We want to help create millionaires who actually feel like a million dollars.
P.S. If you want help building a financial plan that reflects your real life, our Wealth by Design program walks you through every step - from saving to investments to taxes to early retirement strategy.
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