This question came up recently, and it comes up often.
Don’t you secretly want to know if you’ve saved more than your friends or if your income is higher? It’s easy to tell if your house is bigger or if your car is more expensive. But when it comes to retirement planning, we’d all like to know how well we’re doing, right?
In reality, the question is equally as useful as asking whether a size 10 shoe is good or not. I can try to convince you that it’s better than a size 11, but you’d likely stare at me blankly, waiting for me to explain further. So when the question is asked: “How are we doing?” we shouldn’t be surprised when the response is: “Well, it depends; what are you trying to accomplish?”
As an example, we work with families who have multiple homes. While I celebrate their ability to accomplish their dream of having two homes, I wouldn’t be able to handle it. Why? Because at this time in my life, my most valued resource is time. If I could be granted just one wish, it would be more time to focus on interests of mine, and maintaining two homes runs counter to that goal. In fact, I would love to have a smaller house than we have now, but my family clearly have the majority vote on that matter. For others, the second home provides tremendous joy and utility. That’s fantastic.
As a standard response, I answer “You’re doing great!” in response to the question of how one is doing financially. Consider the fact that you’re meeting with a person to determine how to best handle the money you have saved that you will need in the future. Think about that. Not only can you remain fed and sheltered, but you have extra money! That alone says you have done well and deserve to celebrate.
Practically speaking, the goal of retirement planning is to reach a point where your accumulated assets can provide you with enough income to sustain your lifestyle for the rest of your life, without having to go to work for a paycheck. Based on your needed or desired lifestyle costs, your number is different than anyone and everyone else’s. Some wear a size 10 shoe and others wear a size 11.
I suspect that what people are really after when they ask how they compare financially to others is whether it’s just as hard for others than it is for them. In other words, they know how difficult it is to save and invest when there are so many competing interests. And generally the answer is yes, it’s challenging for everyone regardless of income level. If a person has $10,000, they wish they had $20,000. If they have $10 Million, they think life would be easier if they had $20 Million. At every income and net worth level, there are real difficulties.
If possible, it’s best to focus on desired outcomes rather than financial comparisons to others. By getting as clear as possible on what you’re truly desiring to accomplish, it becomes less meaningful what others are doing. Easier said than done, I know.
If you’re considering whether or not you’ll meet your retirement goals when you’d like to be retired, or are already retired but worry about the future, please schedule time with us to build or review your plan. Your enough number is yours alone and as such, you owe it to yourself to discover what it is. We’re happy to help.