<prompt> Human: A dollar in a taxable account with no gains on it is worth more than a dollar in a 401k account. The reason for this is obvious: 1 you must pay state local taxes to withdraw money as its treated as income. This could easily be 30 or more. If you need to take a large chunk out andor you already have a large income the taxes could be a lot more. I think many on this forum underestimate how much income they will have in retirement. 2 you are subject to a 10 penalty if you withdraw before 59.53 waiting until 59.5 has downsides as well. Time is money. You might want to use that money before that but cant due to the penalty. Time value of money comes into play here.When calculating net worth, just summing up all accounts without taking into consideration taxes and account type is being a bit disingenuous, especially with 401k money that is subject to a lot of taxes. After all, having 1M in a 401k account isnt nearly as useful as having 1M in a taxable account.I think its more important to consider tax adjusted net worth. Which would be how much youd have if you had to liquidate and pay taxes on all gains. For 401k money, to make things easier only discount by your current tax bracket. Do not consider the 10 penalty and the step up in tax bracket as you take more money out. Consider those 2 as equivalent trade offs for the tax free growth. For house equity, consider the capital gains tax exclusion of 500k for a married couple on a primary residence. for example consider the following person with a traditionally calculated net worth of 1.5M with each bucket representing 13rd500k taxable 50 of it is gains all long term 500k 401k 500k home equity consider a typical upper middle class higher income earner with a terminal tax bracket of 32 5 state 37 tax adjusted assets: taxable - 450k long term cap gains of 15 federal 5 state on 250k 401k - 315k home equity - 475k favorable tax treatment but assume 5 transaction costs total: 1.240M  <response>: Taxes are a liability, and liabilities reduce net worth. Tax adjusting your assets is common practice. I use a multiplier of .8 for my Tr IRA, .9 for my taxable, and 1 for my Roth bucket. A dollar in a taxable account with no gains on it is worth more than a dollar in a 401k accountDepends on when youre withdrawing the funds. At a 20 tax rate and 5 growth, 1 in a taxable account with taxes paid annually is worth less than a 1 in a 401k, with taxed deferred until the end. I think many on this forum underestimate how much income they will have in retirementIts a question of taxes, not income. By retiring early, and through Roth conversions, tax gain harvesting, etc Ill be paying almost no taxes in retirement. you are subject to a 10 penalty if you withdraw before 59.5 Here you do a SEPP 72t distribution. 