Do You Know Your Number?

Retirement Myth #5: You’re ready to retire when you know your number.

Most of the retirement books I’ve read agree with this statement; however, they rarely agree with each other on just what that number is. One says, before you retire, you need 80% of your annual, preretirement income; another advocates 115% (all that traveling).

One books says you’ll need eight times your yearly salary in assets; still another says one million should do the trick, and a third tells of clients who are waiting to amass five, even 15 million (yep, it makes me sick, too).

However, Ernie Zelinsky (whose How to Retire Happy, Wild and Free is currently #1 on Amazon) says they are all wrong. “A rigid retirement ratio—whether it’s 80% or 105%—is irresponsible and misleading.”

Zelinsky points out the obvious. Someone making 800K a year could probably do fine on 25% of that, and one who makes 5K a year will have a hard time making it on 150% of that.

I wonder if choosing a number is where we should start anyway. Wouldn’t it be better to begin with a plan? What are our dreams? What assets do we need to achieve them? What are we willing to change/give up to make it all happen?

And the answers to those questions will not come from a retirement book.