In a TV commercial, men and women wander around, carrying the physical representation of a very large number under their arms or on their shoulders. The ad’s for a financial product — I forget what. The idea is that each of us, as we start to think about retirement, has an amount of assets/savings that will see us through our golden years. (Lord, how I hate phrases like ‘golden years’.)
Everyone swanning around in the video has a different number, because we’re all different people. Our needs differ and our ability to pile up the folding stuff differs.
The idea behind the number is laudable, but I don’t buy the concept. Surely, what most of us end up with as retirement arrives is as much as we could manage to cobble together. Then we cut our cloth to suit our means. Further, I doubt that anyone has ever retired, with or without a number, and said “Lord, I have too much money”. My guess is that almost everyone says exactly the reverse.
The notion that we control our financial lives is largely moot, I’d argue. Generally speaking, we lurch from one thing to another, planning to start planning any day now. Generally speaking, we only realise in our 40s that retirement is a real thing that might happen to us. Generally speaking, we start from there to trying like hell to accumulate something in our 50s and 60s, if we’re lucky.
And then the axe falls. We wake up that first morning and can’t think of a single reason why we shouldn’t go back to sleep. What remains, financially, is a struggle against the odds to make whatever we have last until we don’t need any of it any more.
Accounting for retired people is easier. They have no earned income, only expenses. No forms to fill out, no sinking feeling when we see how much tax has been deducted, nothing.
Retirement is the moment when The Number stops growing and starts shrinking. And we’re cool with that because, if we’ve planned it right, there’ll be enough. Or, we’re cool with that because we’re alive and have something; whether it’s enough isn’t a bridge we have to cross just yet. Or whatever, in your case, the circumstances might be.
It’s scary when The Number starts dwindling. Here, the argument that ignorance is bliss gains traction. Financially, however, ignorance is never bliss. What you don’t know can hurt you. You probably don’t need a Number, just a constant reminder that more is better and that at least some of it is up to you —within the bounds of the law and your moral code and whatever your spouse thinks best.
Managing The Number once it comes into play is a matter of choice. Some do nothing but; others, me included, take the line that it requires professionals, having whom on board permits the pursuit of matters of greater interest.
What you do and how well you live in retirement will depend on who you are.