By: Edward J. Leach, CPA®, MBA
I often asked this question in high school – it usually involved someone walking away without me finding out.
And now that I have your attention…
In September 2008, the financial services company ING launched a marketing campaign called “Your Number”. You may remember these commercials – they showed busy people going about their day with large six or seven-figure numbers floating over their heads. The number over their head illustrated how much money they would need to have saved by the time they retired.
It directed viewers to their website, where they could punch some numbers into a calculator and come up with their “number.” The calculator was an effort to help people simplify retirement planning and make it less intimidating.
I love making things simple or finding the shortcut. Still, as my colleague Joey Casolaro wrote last week in Remembering your WHY, “Financial planning is one of those things that requires an effort to realize any value.”
Planning for one of the most significant transitions you will ever go through in life – both financially and emotionally, is anything but simple. It shouldn’t be watered down to the back of the napkin financial calculation.
Let’s imagine for a second you signed on to the website and found out:
You were on track or had more savings than your “Number” dictated. Would you stop working? How would you spend your time? Would you stop saving or investing with a long-term view so that you cash out to protect the “Number” when the next market crash comes? How would this information change your perspective on your finances?
You were so far behind your “Number” you couldn’t imagine ever getting there --- how would that make you feel? Desperate? Would you pick up the “Get Rich Quick” money schemes on YouTube?
My point is not to downplay the importance of your “Number” – all financial plans eventually arrive at one. But instead, to focus on building real wealth. Borrowing from one of my favorite financial writers, Morgan Housel, real wealth can be summed up in this way:
“The highest form of wealth is the ability to wake up every morning and say, “I can do whatever I want to today.”
This is why our personalized planning process focuses on your values, priorities, and goals to maximize your life’s most precious resources, time, and money. The “time” element is always left out of the easy “Financial Calculators.” Don’t underestimate the value of your time in your planning, as it is the only resource you have a finite amount of.
To borrow from Morgan Housel again – “The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.”
PS – For those of you who made it this far, don’t worry. Someone eventually did give me their “number” - we have three children and are approaching our tenth wedding anniversary!
Ed Leach, CFP®, MBA, is a Partner and Wealth Advisor at HIGHLAND Financial Advisors, LLC in Wayne, NJ, and works directly with clients advising them on their financial planning and investments. Ed’s work focuses on the unique needs of business owners, helping them extract value from their businesses while creating efficiencies in their business and personal financial plans. He is also a member of NAPFA, which is dedicated to serving fee-only advisors.