As longtime readers know, I like Roger Nusbaum's articles because they're "real." His current article, "Retirement Numbers are Hokum," is meant to keep people from freaking out about achieving some impossible - seeming retirement goal in the millions of dollars by focusing on the monthly income figure they need to achieve. Many will find themselves already halfway there via their expected Social Security income.
You should read the entire article to see how make these simple calculations. For my part, I want to focus on my favorite refrain found therein - which to my mind cuts to the core of success in financial life planning in general (and retirement particularly). Writes Roger:
If you're 66, have $788,000, and want to retire, then can you make that work? Great if you can, but if you can't, then something has to give. Either you don't retire, you downsize your lifestyle, or you take a middle ground of working one way or another in retirement."
Near the end of his article, he discusses a couple of quite creative ways to make things work:
A $2,000 gap then becomes easier to make smaller with some sort of income or exploring some sort of alternative living situation (in past posts, I've talked about relocating to another country as a young, healthy retiree living off of positive cash flow from renting out your house or doing something similar with a tiny/small house). If that still doesn't get it done, then something else will have to give."
If you've not yet figured it out, my favorite Nusbaum refrain - one that appears in numerous articles of his - is that something's got to give.
Folks: This sentiment is the adult within you speaking to the kid that remains inside as well. I recently spoke with an upstanding married couple stressed about their finances. They're noble people who want to live simply, increase time available for family and community activities and limit the claims their careers make on them. They've got great goals, but I observed that the home to which they are moving is on the pricey side. That's what has them stressed because it's more expensive than the home they're leaving. And the implication of this is quite obvious - despite the ideals alluded to above, which are sincere, the reality is that they will have to work more, and spend less time on family and community activities.
In other words, to quote Roger, something's going to have to give. In this case, that will be their most cherished goals. I don't think they've connected the dots. One of them mentioned that when it comes to a home, "I'm sorry - I just need to have space. And I want something new." This was stated unironically, as if merely looking at oneself under a microscope and discovering something as irrefutable as DNA. Unfortunately, balance sheet math is also irrefutable, as they will come to discover as the work pressure mounts in keeping with the cost of maintaining their large new home.
I think we're all to various extents guilty of this split personality when it comes to our needs and wants. But as I have often written, one of the best ways to learn things is through other people's mistakes. I plan to keep the above scenario in my own mind whenever I go about acquiring what I "need," making sure I fully contemplate what I lose by acceding to my need. Because it is true: something always has to give.
Please share your thoughts on this in our comments section. Meanwhile, below please find links to other advisor-related content on today's Seeking Alpha.
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