I recently spoke on our monthly webinar about how there really is no “magic” number that can be calculated to ensure a comfortable retirement.  Rather than chase a fictious amount, I suggested that investors should focus on accumulating funds in assets like 401(k)s and IRAs.  And that they also need to eliminate or at least minimize debt before retiring so that a minimal amount would be needed to pay for housing, transportation, and living expenses. 

By balancing this accumulation of funds with prudent debt reduction, retirees would have a solid foundation to have the cash flow needed to enjoy their retirement, however long that may last.   

Two more observations from 30 plus years of being a financial advisor.   

Firstly, people learn to make do with their situation.  I’m not saying this is always easy or without significant stress sometimes.  However, I’ve seen people that have retired with not a lot saved, who have made their circumstances work over the long term.  This has often meant living less than the “ideal” retirement they had dreamed of, but they have been able to maintain the general lifestyle they had prior to retiring.  That’s not bad.  

Secondly, I find that there’s a common trend to “overestimate” how much will be needed to retire comfortably.  Sometimes this is the client’s perspective, but I also believe higher expectations are sometimes driven by financial advisors and financial firms.  Partly because, yes, it is beneficial to aim high, knowing that the more someone retires with, the more likely a successful outcome.  But I also believe that sometimes it’s used as a scare tactic to drive more business and thus generate greater fees and commissions.  (Hence, the concept of the “Magic Number.”) 

So what’s the answer to all this?  Do the best you can and work with an advisor you trust, not a salesperson.  Your advisor needs to be someone you know will work in your best interests.  That’s called a fiduciary. 

Ever heard the phrase “the certainty of uncertainty?”  Having trusted advisors can help with the uncertainty that will come both before and during retirement.  We’re here to help you through those times.