Old School Approach Won’t Work
I hate to tell you but you aren’t going to make your goals for retirement. Well, do you even have a goal? Do you even have a ‘number’? Probably not. Most people purposely don’t calculate a number because it’s too painful to realize just how much you’ll need to retire.
“I’d rather just not know”.
Since you probably don’t have a number (and you actually should), here is a start. Let’s say:
- You want a new or slightly used car every 8–10 yrs
- You want to retire in your 60s
- You want one nice vacation with family every year
- You want to own a house in retirement — too risky being a renter
- You want to go out to eat once a week at a decent place
- You want to be able to help out your kids in emergency situations
Build your own list. The point is that THIS IS NOT EXTRAVAGANT RETIREMENT LIVING.
So here’s the number — it’s a range. $1M to $3M. (super comfortable is $6M to $10M but let’s not go there for now).
WTF??? Yep. It’s bad news for 99% of people. This is where people close this article and move on…Seriously. This is where people drop bc they realize they are in trouble. BUT HOLD ON.
Retirement savings by State — go ahead and Google this:
Arizona — $1M
California — $1.3M
Colorado — $900k
Florida — $900k
Georgia — $850k
Kentucky — $900k
Nebraska — $786k
Nevada — $1M
Wisconsin — $900k
Do you see the average?
Here’s the issue. It’s the year 2021. Inflation is off the charts which means that your dollar buys you less. It costs more to buy the same thing. It’s not transitory — I hate to be the one that breaks it to you.
So the old school approach of “put 40% into stocks and 60% into bonds” isn’t gonna work. Sorry. If you have a financial advisor that is telling you that, fire them. Well, actually, first ask them about inflation and the trillions of dollars of debt that needs to be paid back, then fire them. Most likely they are clueless.