Do We Have Enough?
Good Morning Relaxing Retirement Member,
When I meet with 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.
My answer is always the same, “I don’t know……yet…. because the number is so different for everyone. But I can show you how to find out!”
Why Is Everyone’s Number So Different?
Let’s take a look at two couples, Jim and Mary, and Ron and Rose, both age 65.
To keep it simple using round numbers, assume each couple has:
- $2 million dollars in investments,
- the same social security retirement income, and
- the same pensions.
Beyond that, here’s what else we know about them:
Jim and Mary 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, siding, a new furnace, and updated bathrooms. They have always lived a very modest lifestyle with little or no debt.
Ron and Rose, 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 level of investments, and the same amount of income coming in from social security and pensions, the amount they need to have in their Retirement Bucket™ is drastically different because they spend so differently.
In short, Ron and Rose are a lot more dependent on their Retirement Bucket™ than Jim and Mary.
The income that will be required to support Ron and Rose will be much greater than Jim and Mary. As such, Ron and Rose will need to withdraw a much bigger amount each year from their Retirement Bucket™, thus requiring a bigger number.
But, Have They Reached Their “Number”?
With that said, however, have Ron and Rose reached their “number”?
How about Jim and Mary?
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 Ron and Rose or Jim and Mary 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 Jim and Mary are more likely to have reached their “number”. But, Ron and Rose 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 will “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, as we kick off a brand new year together, the first critical step in The Relaxing Retirement Formula™ is to get a really good grasp on just how dependent you are on your retirement savings.
Become infatuated with knowing your numbers cold!
In the next edition of The Retirement Coach Strategy of the Week, I’m going to show you the fastest and most accurate way to accomplish that.
Committed To Your Relaxing Retirement,
The Retirement Coach
P.S.: WHO do you know who could benefit from receiving my Retirement Coach “Strategy of the Week”? Please simply provide their name and email address to us at info@TheRetirementCoach.com. Or they can subscribe at www.TheRetirementCoach.com. I appreciate the trust you place in me. Thank you! (The content of this letter does not constitute a tax opinion. Always consult with a competent tax professional service provider for advice on tax matters specific to your situation.)