Is "Your Number" Hokum

Is working to "your number" the wrong thing?

Khe Hy at radreads did a deep dive on why the entire "retirement number" concept is a pursuit of the wrong thing. I don't entirely agree but I don't entirely disagree either but either way he asks some great questions. Hy cites the many variables that make planning at least difficult and maybe impractical (as Hy sees it). Of course he is right that many things get in the way, some good and some not so good, some act of God and some behavioral that all serve to complicate the pursuit of some number that may or may not end up being relevant.

Hy encourages readers not to go "FIRE crazy" sacrificing too much of today for tomorrow which makes a lot of sense. FIRE stands for financial independence/retire early the caricature of which is retiring with $1 million at 35 by living in an 80 square foot house, biking to work.

I think you do need some sort of a number but I don't think you need to be a slave to it. For many years I have said that regardless of whatever you or someone else determines your number to be, the number you end up with is your reality and you'll make it work because you have to. If you can retire with no mortgage and you determine that your basic lifestyle will cost $50,000 and you'll get $30,000 all in from Social Security then you can ballpark that you need to find $20,000 from somewhere. Assuming the 4% rule for withdrawals, that implies your number is $500,000. That doesn't leave much room for error though, and may not allow for doing a whole lot of traveling beyond road trips within a day or two of where you live (may not be so bad if you're in the Mountain Time Zone).

In that scenario, if you end up with $400,000 you're not going to starve or be homeless but something would have to give. Something having to give could be spending less or some sort of part time endeavor that generates an income. In this example, part time income of $1000/mo, not a heroic number, would be a huge difference maker in terms of nothing else having to give.

If you're 60 now and think you want to retire in five years you probably do have some sort of ballpark number that has been on the front burner and that you've been working toward. Are you ahead of where you probably should be now in relation to that number or are you behind? Conceptually, you probably know even if not in precise terms of what would be required to get ahead of your number.

Tying the FIRE influence in, the more you save, the more optionality you have in the future. FIRE is absolutely intriguing but I've blogged many times about why I think it is a bad idea summed up as less optionality for the future. But the financial independence associated with the movement is a great idea and can be achieved without retiring. The simple way to do this is with some sort of work you truly love doing and doing it in such a way that you own your time. This is simple as in simple to explain and understand but not easy to do. The extent it resonates with you and to the extent you can envision how you might get there, you can start to work toward making it happen.

When you do get there professionally, your number becomes less of a front burner issue because you're less likely to be so focused on getting out of the rat race. Arguably, if you are getting paid to do what you love and own your time, you're already out of the rat race. Think about how empowering that is. You're not a slave to a time clock (metaphorical or otherwise) or your number.

A number as a general framework? Sure. But a number set in blood that causes stress and aggravation? Hopefully not.

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