Retirement Number

I recently read an article discussing the ING television ads which show people performing their daily activities while carrying a sign under one arm. On each persons sign is a 6 or 7 digit number that represents that persons required nest egg figure. The author explains that rather than focusing on a specific number, the saver should focus instead on how much income will be needed, and then plan accordingly. He suggests that the reader use an online retirement calculator to derive his specific income need based on various data inputs.

I agree with the writer that focusing on retirement income makes more sense than trying to derive your magic nest egg number. But, I would challenge the reader to take the concept a step further. Based on my experience with clients, it seems that their main concern is to maintain the same standard of living post-retirement that they was attained during their working years. For many, this will present an enormous problem. In attempts to maintain present lifestyle demands, many are postponing their retirement savings. And, as lifestyle demands continue to increase, current paychecks have become barely sufficient to keep up with the monthly bills. Many are subsidizing their financial needs through a variety of methods including refinancing, home equity loans or lines of credit, borrowing on credit cards, and financing as much as possible. Such demands on present and future income makes calculating a retirement income an unrealistic fantasy.

So, here's the challenge. Suppose that you have no mortgage, loans, or monthly credit card or car payments. Run the calculator again (without all of these payments) and you'll discover that your retirement income requirements are dramatically reduced. Retirement begins to look like a tangible concept that almost anyone can achieve.

The following steps provide the means for you to lower your present and future income requirements:

(1) Separate your wants from your needs.
(2) Stop borrowing money.
(3) Develop a budget and stick to it.
(4) Pay off your debt and stop creating more.
(5) After your debts have been eliminated, begin saving as much as you can for retirement. Ten percent is a good place to begin.
(6) Persevere

I agree that this process appears to be too simplistic. But, implementing the process and seeing it through presents quite a challenge. However, I can assure you that it is an endeavor that is worthwhile, and one that will increase the odds that you attain the retirement of your dreams.