If I ask you ‘what’s your number?’, the first thing that will come to mind will probably be your phone number. But what’s the next most significant number after that?
We’re all being rightly encouraged these days to know our blood pressure and cholesterol numbers, so maybe those will be next. Perhaps you might think simple and give me your age, or you might have a lucky number. But, as a financial adviser, what I’m looking for when I ask for your number isn’t any of these.
It’s a number that’s just as important as all of them – your retirement number.
Your retirement number is the amount of money you’ll need to get you comfortably through three or even four decades of retirement, during which time you’ll probably see living costs rise threefold.
This number will be different for everyone depending on lifestyle, family, status and standard of living, but what unites a lot of people is that the majority don’t know what their number is.
From Scary to Certainty
It might sound like a scary question to be asked up front but, once you get to grips with it, knowing your number can be massively liberating. Many of my clients instantly warm to the idea that together we can calculate a unique number to aim for, because knowing it can be a great source of comfort and security.
If you know your retirement number, it empowers you to put a plan in place on how to achieve it and therefore predict with some certainty when you can retire. Whatever the size of the number (it can sometimes be a pleasant surprise to find out it’s smaller than you thought), knowing it is the first step to reaching it.
Knowing your number was a concept developed by Lee Eisenberg in his New York Times bestseller ‘The Number: What Do You Need for the Rest of Your Life, and What Will It Cost?’. He recognised that most of us avoid thinking or talking about the topic, preferring to put off dealing with it until some unspecified point in the distant future – or maybe even never getting around to it at all.
It’s my job to encourage people to engage with their own personal calculations as soon as possible. If you want a fulfilling retirement where you’ll tick off everything on your life list, the earlier you take control the more likely it is you’ll achieve your aspirations. It’s as simple as that.
Not only will your own number be unique in terms of its amount, it will be unique in terms of what it means to you too: perhaps freedom from the 9-to-5, a life of luxury, or just a simple and dignified passage through your later years.
How We Help You Get to Your Number
With us, working out your number is a simple process. We sit down with you and help you calculate how much in today’s money it would cost you to live your dream life each year. This is the fun bit – it’s where you get to flesh out your bucket list and design your future, taking account of all the things you’d really love to do.
We calculate how much this lifestyle is going to cost and the resources you’re going to need to make it happen – from the day you retire all the way up to the days when you’re not going to be trekking around the world, parachuting out of planes or cruising the seven seas any more.
We also factor in inflation – which has typically been around 3% over the last 30 years – to make sure that your savings and investments don’t lose value in real terms and that your spending power keeps pace with the economy.
Back to the Future
Knowing your number isn’t the end of the process. Once we’ve arrived at a figure, we then need to apply it to your current financial plan, or, if necessary, devise a new one to make sure you meet your new target.
Working backwards from the destination number, we can define and set goals and targets for your savings and investments. It helps us identify the financial areas of your life you could modify and looks at ways you can manage your outgoings and expenses better. It becomes a robust strategy that is all aimed at delivering your number.
Having a well-defined end goal and a clear-eyed view of the actions you need to take to achieve it is also a great motivator. When you know the prize that’s waiting at the end of the road, and it’s not just a vague aspiration for some unknown date in the future, it’s so much easier to stick to your plan and not be tempted to stray from your long-term commitment as you’re striving for it.
Of course, our aims and ambitions can change over time. We are all a constant work in progress, and our plans and priorities will alter as we progress through life. By developing a close relationship with you, we make sure your plan is not only relevant to your life today but also remains geared and focused towards your building your ideal life of tomorrow.
Are you ready to work out your number? Get in touch, we can start today.