In my last post I talked about the circumstances that have made you ultimately responsible for your financial well-being in retirement. It’s important to define what I mean when talking about financial well-being.

First and most important, financial well-being is not a number! “I’d be all set if I had a million dollars” is a great example of what financial well-being is not. Okay, you may be able to make it work on a million dollars, however the gap between what you have set aside for retirement today and a million dollars may seem unachievable, leading to despair. On the other hand, a million dollars equally divided over 20 years is $50,000 a year. You may think you need more than this to live on each year, or you may expect to live another 30 years or more, making the annual draw on your million dollars as little as $30,000 a year. The problem with this way of thinking is there is a lot of uncertainty surrounding retirement and no thought to the quality of retirement we’re looking to finance. Continue reading →