This is one of the most popular questions I’m asked, along with, "How much do I need to save before I can retire?" These questions, especially the first one, are some of my favourites, and I'll explain why shortly. However, there's a similar question I often encounter, which is a bit more challenging to answer: "What does the average person need saved before they can retire?"
I completely understand why this question comes up—it helps individuals gauge whether their retirement expectations are reasonable and realistic. But answering it isn't as straightforward as it seems. This is largely because the concept of the "average person" is so broad that it becomes almost meaningless when we try to apply it to retirement planning.
Think about it: What exactly does the "average person" look like? Some people wouldn't think twice about eating out every week, considering it a normal part of life, while others might find the idea of paying to go to a restaurant almost unthinkable. Similarly, some individuals have expensive hobbies that require significant financial commitment, like traveling, while others find immense satisfaction in simple pleasures, like gardening or reading, which cost relatively little. Given this vast range of preferences and lifestyles, it’s challenging—if not impossible—to pin down a one-size-fits-all answer to what the average person needs to retire comfortably.
Now, let's circle back to why I enjoy being asked the question, "Do I have enough?" The beauty of this question lies in its specificity. When someone asks this, I can give a much more tailored and precise response. We can dive deep into that individual’s unique circumstances—examining their target retirement income, the age they plan to retire, and what financial resources they currently have. From there, we can assess what additional steps may be necessary to reach their retirement goals. This personalised approach allows us to create a retirement plan that’s truly aligned with their specific needs and aspirations, rather than trying to fit them into an "average" mould that might not reflect their reality.
So, while the concept of what the "average person" needs to retire may be elusive, the question of whether you have enough can be answered with clarity and confidence through a personalised evaluation of your situation. This is what makes retirement planning both a challenge and a deeply rewarding experience—it's all about crafting a plan that fits you.
