15 Comments

  • March 28, 2013

    Ted, awesome post! Retire the word retirement? Bravo! Turn down the volume on the “what’s my number” angle? DOUBLE bravo! In addition to the “portfolio vs. paycheck” perspective that you’ve brought up, here’s how I frame it, especially when I’m talking with people relatively early in their financial lives:

    Don’t think of it as “what’s my number,” instead think of it as points A, B and C. You’ve reached A when your net worth hits the point that you can walk completely away, and sustain yourself (and dependents), but at a somewhat minimalist lifestyle. Think of it as comfortable, but no frills. Point B means a lifestyle similar to your current one. And point C? A dream lifestyle, where you pursue all kinds of things you haven’t had the time or money for before.

    That’s how people who have successfully navigated this terrain tend to think about it. Got really big dreams? You’ll probably have to work longer, and save/invest more along the way, to afford them – that’s the tradeoff. Burned out with the rat race? Walking away early means a less comfortable lifestyle.

    All three points, of course, should be determined with conservatively realistic assumptions about health care, inflation, length of life, etc. And, all three can easily be mixed and matched with different concepts about income. Example: maybe I’ll stay in my high paying but very demanding job until I get to point A, then downshift to something more fulfilling – I’ll just slow down my progress towards point B, and I’ll be happy about the tradeoff.

    I’ve found that this is much more helpful and realistic way to frame the question than the “solve for X” what’s my number approach, because it spotlights the choices and tradeoffs that each person is free to make for themselves.

  • March 29, 2013

    Ted, awesome post! Retire the word retirement? Bravo! Turn down the volume on the “what’s my number” angle? DOUBLE bravo! In addition to the “portfolio vs. paycheck” perspective, here’s how I frame it, especially when I’m talking with people relatively early in their financial lives:

    Don’t think of it as “what’s my number,” instead think of it as points A, B and C. You’ve reached A when your net worth hits the point that you can walk completely away, and sustain yourself (and dependents), but at a somewhat minimalist lifestyle. Think of it as comfortable, but no frills. Point B means a lifestyle similar to your current one. And point C? A dream lifestyle, where you pursue all kinds of things you haven’t had the time or money for before.

    That’s how people who have successfully navigated this terrain tend to think about it. Got really big dreams? You’ll probably have to work longer, and save and invest more along the way, to afford them – that’s the tradeoff. Burned out with the rat race? Walking away early means a less comfortable lifestyle.

    All three points, of course, should be determined with conservatively realistic assumptions about health care, length of life, etc. And, all three can easily be mixed and matched with different concepts about income. Example: maybe I’ll stay in my high paying but very demanding job until I get to point A, then downshift to something more fulfilling – I’ll just slow down my progress towards point B, and I’ll be happy about the tradeoff.

    I’ve found that this is much more helpful and realistic way to frame the question than the “solve for X” what’s my number approach.

  • Ted Jenkin @ Your Smart Money Moves
    March 30, 2013

    Great comment and insight!!

  • April 4, 2013

    Great points Ted. After reading this, I came across a study by Dr. Ben Seymour at University College London that showed when people lose money it activates an area of the brain that involves pain and fear. This may explain why people hate watching their retirement funds shrink over time.

  • Ted Jenkin @ Your Smart Money Moves
    April 5, 2013

    That’s very interesting. So it actually may be scientific!

  • April 9, 2013

    I really liked this topic. It’s sad to see the retirement age consistently rising and the dollar is becoming worth less and less.

  • Ted Jenkin @ Your Smart Money Moves
    April 11, 2013

    I think this is why people need to think about retirement not being a jumping off point but change the word to think about how to make work optional.

  • Jason
    September 13, 2013

    This is complete nonsense. If you had 3 Million you could purchase an annuity or a balanced safe portfolio of bonds, dividend stocks etc. The annuity would gives you the same thing as the wonderful pensions you mention except one important difference…it can’t be taken away.

    I don’t care how safe you think your slothful pension is, it can go away. It’s a ponzi scheme built on the backs of future generations. It’s not sustainable, particularly for government workers.

    I would take that $3 million any day over some pension.

  • Ted Jenkin @ Your Smart Money Moves
    September 19, 2013

    An annuity is exactly the type of pension am talking a about. And which safe portfolio of bonds and dividend paying stocks are you talking about. Show me a low risk one over the last twenty years after inflation and taxes. It’s not nonsense. It’s reality.

    I’ve worked with hundreds of clients who had 3 million or more in retirement. The truth is they don’t enjoy retirement as much because they are focused on making sure their accounts don’t go down. Consequently they spend less and worry more.

  • Mike
    December 20, 2016

    Ted, I am closing in on the $3 million dollar mark. I am 62 years old. You hit it on the head perfectly. I am already fretting about drawing down on my retirement savings. What is a guy to do! I find some comfort in the annuity approach but it seems like a low pay out on such a large amount of money. Jason is right about pension plans they – can be reduced or in severe cases cut in half years later.

  • Ted Jenkin @ Your Smart Money Moves
    December 20, 2016

    Jim I am an expert at this and I can absolutely help you this is my specialty part of this is about the overall investment strategy but it’s more about behavioral finance and I can show you how to truly enjoy the fruits of your labor we should set up a time to connect!