How much do I need to retire?
A simple question, with so much nuance that it’s nearly impossible to answer.
A few questions that can help narrow this down:
-How much do I need to spend each month on expenses?
-How much do I want to spend?
-How long do I need my money to last?
-What might cause my spending to increase or decrease?
-What level of risk am I comfortable accepting?
These questions are far from a comprehensive list, but they help illustrate something important about retirement planning.
Most people spend their time thinking about ‘the number’.
That’s understandable—it’s human nature. A number feels like something we can control. It can be measured. It feels tangible.
However, the more important question is, what do you want your money to accomplish?
Two people with the exact same portfolio value may have completely different retirements.
Person A may want to travel the globe, be carrying a mortgage, and need to cover their own monthly health insurance costs if they retire early. Person B may have modest spending goals, be debt-free, and plan to work longer and maintain benefits.
These two people could have the exact same ‘number’, but couldn’t be more different in what they want their money to accomplish.
Neither of these people is right or wrong. They each want different things from their money.
The most important retirement question isn’t “What is my number?”
It’s “What do I want my money to accomplish?”
That is why personal financial planning is just that—personal.