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It used to be considered something of a tawdry question, although it could be flattering as well: “What’s your number?” Nowadays, your inquisitor is probably asking about retirement — as in, how much you think you need to retire. And, as it often was before, it’s the wrong question.
Is your number $5 million? $1 million? $50,000? No one seems to know how much they’ll need, but whatever they think, they’re probably not on track to save it. That confusion is unsurprising, because a number cannot reveal if you are on track for retirement.
Of course, it’s better to have more money than less. But a “magic number” is meaningless. It is good to have financial goals, and to work toward them, but a wealth goal is counterproductive. The aim shouldn’t be to attain a certain level of wealth by a specific date, but to assure yourself of a steady level of income throughout your retirement. These are fundamentally different objectives, and they require a different investment strategy and mindset from the start.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.