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Beyond the Million-Dollar Mark: Defining Your Retirement Goals

by James Bode James Bode | November 14, 2024

A number is not a retirement goal; what’s your goal, really?

When it comes to retirement, many people throw around the idea of needing a specific amount — like $1 million, or $2 million or $5 million — without fully grasping what that figure represents. It’s not just about the number; it’s about what that money will achieve for you. 

I often ask clients, “What does a million dollars get you?” Is it just a number you’re chasing, or does it align with specific life goals? 

After decades of working with people on retirement planning, I can tell you that most people don’t know their goals. And even if they do know what they want, they aren’t very specific about it. It’s almost as if they don’t know the true value of money. 

Maybe that’s why some version of a “million-dollar number” is what people think they need to hit. Of course, how many million depends on the person I’m speaking with — their lifestyle, their expectations, and most importantly their age. 

 

Key Questions to Ask About Your Retirement Goals

In our practice, I absolutely do see people around 60 years old who have a million dollars or more, for whom retirement feels attainable. That’s because many of those people have a pension or other income streams, like income from real estate or a business that will supplement their retirement income. 

Not everyone is that fortunate, though. For those younger — especially those under 60 — a million dollars these days is inadequate for retirement.

As you consider your own retirement path, it's essential to ask the right questions to ensure your savings align with the lifestyle and security you envision for the future.

 

Are You Setting the Right Goals for a Successful Retirement?

There's a significant portion of the population that chooses not to retire simply because they're uncertain about their financial situation

Take someone who is 40 or so years old, currently saving aggressively and estimates that by retirement age, they’ll have $5 million saved. What does that truly mean for their lifestyle? 

By breaking it down and outlining what that money can accomplish, we help clients see possibilities they hadn’t considered — like affording a second home or taking that dream vacation.

I recently met with a client who had $1.5 million in assets and was living comfortably off a pension. Yet, she was hesitant to spend her money. “I just don’t like to spend,” she said. But I encouraged her to think differently. “You can take out $60,000 a year without even touching your principal — what would you do with it?” 

 

What’s Stopping You from Enjoying Your Retirement Savings?

You’re the youngest and healthiest you will ever be.

Encouraging clients to enjoy their health and wealth is something I truly believe in. One of the things that my colleague Paul Pignone used to say to all of his clients, and which I now say to all of ours, is “You’re the youngest and healthiest you’ll ever be right now.” (For those facing chronic illness of course that is not true, but for the majority of people it is. And, it is true for all of us that we will never be any younger than today.)

Why wait? Life is unpredictable, and many retirees (and non-retirees!) don’t get the chance to live out their dreams because health issues arise unexpectedly. 

The key question then becomes, “Why aren’t you doing it?” 

For many, the fear of running out of money looms large. I challenge people to think about what would ease that fear. How can you begin to use your savings before it's too late? 

For many clients, especially those over 60, the ingrained habits from their upbringing — often shaped by parents who lived through the Great Depression — can lead to a reluctance to spend. I often find these clients, who have saved diligently for decades, anxious about enjoying the fruits of their labor when retirement finally arrives. 

 

Easing Uncertainty with a Well-Defined Financial Plan

People think that financial planning is about “the numbers,” asking questions like “When can I retire? How much will I need?” 

Yes, that’s true: through financial planning, we can uncover all sources of income and expenses, make projections, establish when you can retire and how much you will need. But the real power of financial planning is giving you the ability to relax knowing that you HAVE a plan. 

For clients who have been saving in a disciplined way, the outcome of a financial plan may reveal a surplus — money they can use without touching their principal. 

For example, if you’re only withdrawing 2% annually from your portfolio, you may be able to safely increase that to 4% or 4.5%. When I present this information, I ask, “What would you do with that extra (for example) $20,000 a year?” The responses vary widely — from saving it for a grandchild's education to planning more travel.

Even for people who, because of a financial plan, discover that they need to save more, or work longer, at least they can relax into knowing how much longer, and how much more. This way they no longer need to live in fear of the uncertainty of not knowing.

 

The Difference Between Fear-Driven and Goal-Driven Financial Planning

Too many financial advisors play on their clients’ fears.

Too often, financial advisors play on fears of running out of money, which is unethical and totally unproductive. It’s also not in a client’s best interest, which is something that a good financial advisor should always place first. 

I believe in a balanced approach to retirement planning where clients can enjoy their savings while maintaining sustainable withdrawals. After all those years of hard work and sacrifice, it's disheartening to see people hesitate to spend just because they are afraid.

 

Are Your Financial Goals Based on Fear or Driven By A Strategy?

Retirement is about enjoying life, not fearing it.

Retirement should be a time of enjoyment, not fear. Understanding how much is enough to retire isn’t just about numbers; it’s about quality of life. It’s important to shift the conversation from “what you have” to “how you can live.” After all, that’s why you’re working so hard! 

My advice is: keep on saving using a time-proven strategy that will lead you to where you want to go, explore your options always, and don’t let fear hold you back from the life you truly want to lead.

James Bode is Managing Partner at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.

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