Discover YOUR Number
If you’ve done any reading on the topic of retirement, you’re familiar with a term that is used in many circles known as “the number”. In other words, “what’s your number”? What this refers to is the amount of money you need in order to support your lifestyle without working. In many instances, when I meet someone for the first time, one of the things they want to know very early in our conversation is “do you think we have enough?” That’s the question on the tip of everyone’s tongue, but the answer is very different for everyone.
Why Is Everyone’s Number So Different?
Let’s take a look at two couples, both age 64. Each couple has $2 million dollars in investments, the same social security retirement income, and the same pensions.
Doug and Diane have no mortgage or home equity line of credit, and they’ve recently completed many of the major upgrades to their home, i.e. a new roof, vinyl siding, a new furnace, and new bathrooms. They have always lived a very modest lifestyle with little or no debt.
Gary and Grace, on the other hand, still have a $300,000 balance on their home equity line of credit that they took out to pay for their kids’ college tuitions and weddings, and a condo down in Florida they bought a few years back. They each drive high end cars. And, while their home is very nice, after 31 years, it’s starting to look “tired” and could use some upgrades.
Can you see how each couple’s “number” is drastically different?
What’s the difference?
Even though both couples have the exact same amount of investments, and the same amount of income coming in from social security and pensions, their “number” is drastically different because they spend so differently. In short, Gary and Grace are a lot more dependent on their retirement savings than Doug and Diane. The income that will be required by Gary and Grace will be much greater than Doug and Diane. As such, Gary and Grace will need to withdraw a much bigger amount each year from their investments, thus requiring a bigger “number”.
But, Have They Reached Their “Number”?
With that said, however, have Doug and Diane reached their “number”?
How about Gary and Grace?
At this point, we don’t know. And, that’s a very important point! Most people make their decisions based on their perception of how they “measure up” to others. Based on what they hear on television, or on what a friend or colleague tells them. The reason we don’t know if Doug and Diane or Gary and Grace have reached their “number” is that we haven’t thoroughly quantified what it costs them to support their lifestyle yet. And, that’s the key. Yes, it’s true that Doug and Diane are more likely to have reached their “number”. But, Gary and Grace may have as well.
It’s ALL in the Numbers
This is why it’s so critically important for you to have a clear handle on what it costs you to live the way you want. Otherwise, you will have unnecessary anxiety and you’ll “pull your punches” by restricting your spending for the rest of your life because you don’t know if you have enough. Or, you will continue to work because you think you “have” to, when in fact you may not “have” to.
So the first critical step in The Relaxing Retirement Equation™ is to get a really good grasp on just how dependent you are on your retirement savings. Become infatuated with knowing your numbers cold! And stay tuned as I show you the fastest and most accurate way to accomplish that.