How Much Do You Need?


How Much Do You Need From Your Simple Trading For Retirement?

How much do you need for retirement?  This is, of course, a difficult question to answer. How do you determine your cost of living, obligations and longevity many years hence? The answer, of course, is you can’t. Despite the well meaning (though frequently misguided) work of financial advisors, it’s virtually impossible to plan for something that has so many unknowns. The solution? Generally, a number is created through the machinations of a spreadsheet on a base number that is some percentage of your current gross income. That number is then grossed up by a number of factors and you’re presented with a “retirement number.” A number that, once achieved, should cover you comfortably throughout the full, still unknown length of your retirement.  While we’re aware that this is, perhaps, an oversimplification, we would wager that the underlying methodology is accurate. Further, the result is the same… A number is created which may or (most likely) may not accurately reflect your future needs.


What Can You Do?

So what is one to do?

Increase your retirement number?

Cut your expenses to nil and assume that you will be able to keep them at nil into and through retirement?

Stick your head in the sand and ignore the issue (akin to covering your ears and yelling “La la la la this is not happening”)?

Unfortunately, most people seem to take the latter approach (Stop shaking your head…when did you last spend any real time working through your retirement plan?). I recognize the difficulty (and, in a sense the morbidity) of thinking about this issue, but trust me, it will feel much worse to think back and wonder why you didn’t take steps to better prepare for the inevitable.

A Tale Of 2 Retirements

Lets look at a couple of retirees to bring the point home. Mr. X led a charmed life. He went to the right schools, worked hard and got the right job. He worked even harder and climbed the ranks of management to the executive dining room. On the back end of his career he took a package and walked away from corporate life thinking he was ready to golf his way through retirement. Fast forward several years… a chronically ill wife and an irresponsible daughter and suddenly Mr. X’s golf infused life is in peril. His modest pension, social security and dwindling portfolio are foremost in his mind at all times. And, given his age and narrow skill set, he feels there is nothing he can do about his situation. He’s discovering that his savings and defined benefit packages may not cover his retirement well after he has left the workforce… this is also known as the “retirement trap.”

Now let’s look at a different approach. Mr. Y immigrated to the United States as a young man with neither the proverbial “pot nor window.” He took a job as laborer and, in due time, saved enough to buy the business for which he worked. Over the years, taking prudent risks,  Mr. Y managed to buy several additional passive cashflow businesses in various industries. While Mr. Y passed away recently after an extended illness (may he rest in peace), Mrs. Y has settled into a fairly comfortable retirement financed largely by cashflow from the portfolio of property and businesses that she still owns.


What’s Your Retirement Tale?

Now take a look at your own life… Obviously, there are risks everywhere in life and no one can predict future illness, boomerang kids behavior or longevity… or asset values for that matter.  However, does your path more closely resemble that of Mr. X or Mr./Mrs. Y?  More importantly, whom would you RATHER emulate?

If you’re like me, you’re far more interested in a life of independence and self-determination.   A life more like Mr./Mrs. Y.  If that’s the case, take control of your life and retirement prospects by taking control of your finances through simple trading.  

You’ll be glad you did.

And so will Mrs. Y.

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