Retirement planning profoundly personal

Are you on track for retirement? Unfortunately, there’s no one-size-fits-all answer to that, explains Sonnie Bailey.

Every year or so, I stumble on an article that suggests you need to have $X saved by age 40 or that you need to have accumulated $Y in order to retire comfortably.

These types of articles imply that there is one way to be ‘‘on track’’ when it comes to your finances. If you aren’t at the level that’s being prescribed, you’ve got some catching up to do.

The problem is we’re all different. We’re on different paths in life. You can take two people who are in objectively identical situations: They might be the same age, have the same level of income, similar professional prospects, and the same level of assets and liabilities. But what is suitable for one might be completely different to what is suitable for the other.

This is because these two people could be completely different in terms of their values and what they want out of life.

Similarly, what keeps one person up at night might be completely different from the fears of the other. Financial security – or security in general – might mean different things for each person.

Think about it in terms of some of your friends, family members, neighbours and colleagues. We all have a different lens for seeing the world. We all have differing values and priorities. What’s right for one person isn’t right for another.

On top of this, most people aren’t in similar situations. People can follow very different professional trajectories and have different levels of income.

Some people can experience good fortune, and others can face headwinds. Some of us are born into more privilege than others.

Even when it comes to retirement, people are different.

Sometimes people heading into their 60s tell me that with their pre-existing health issues, they’ll be lucky if they get into their mid-80s. Other people at a similar age and stage say they hope to live to 120.

The implications for how much you need, and how to manage your retirement savings, are enormous.

Similarly, two sets of retirees who are in the same objective situation (including health and longevity expectations) might have a different financial trajectory ahead of them based on their expectations regarding how they want to help out loved ones or causes they care about.

This is why writing about personal finance for a wide audience is so difficult. What is relevant for one person may have little weight for another. What represents being ‘‘on track’’ for one person might not be for another.

One type of investment might be ideal for a certain type of person. But just because that’s the case, it doesn’t mean that it’s ideal for you, or for the next person.

Take liquidity, or the ability to turn your wealth into cash at short notice. For some people, liquidity might be important in case of emergencies – or opportunities. For others, liquidity is dangerous, because if they have access to money they’ll spend it. For others, liquidity can be something of a red herring.

Just because something is suitable for your friend, family member, neighbour or colleague, doesn’t mean it’s right for you. They are on a different path.

This is easier to see when it comes to decisions such as what someone chooses to do professionally, or what they like to do as a hobby, or watch on television, or listen to on the radio.

It’s true that there are variations on certain themes. But even then, these themes tend to be less about money when you scratch the surface.

Many concerns, for instance, aren’t really about money.

Once you reach a certain level of income and/or assets, these concerns are more about feeling secure, being engaged on a dayto-day basis, and having a meaningful life.

Similarly, when I ask people what they don’t want to happen, the answers end up being about health and relationships more so than money.

Money is a means to an end. Wealth is less about dollars and cents, and about a bigger question, with an answer that is personal to each of us.

Ask yourself: What does ‘‘wealth’’ mean to me? Which is an extension of the broader question: What is your path? And what do you want it to be?

Once you gain clarity on these questions, financial decisions tend to become a lot clearer, and you can gain more comfort regarding whether a certain approach is appropriate for you or not, regardless of whether it’s suitable for someone else.

One of the most rewarding moments I have with clients is when I see them start to put this all together for themselves. They realise that the decisions in front of them, right now and into the future, should be dictated by what’s right for them, not necessarily what is suitable for other people, or what is the generic ‘‘right’’ thing to do.

Sometimes there are really special moments, when clients don’t just realise that this applies to decisions going forward. It applies to the decisions they have made to date.

They realise that, despite the misconceptions they have carried for so long, they are already on track – in relation to their own unique journey through life. Are you ‘‘on track’’?

That’s a profoundly personal question. I wish I could answer it for you. But it’s something you’ll need to work through with your own circumstances in mind.