How Do I Know When I Have "Enough"? (如何知道你的退休金"夠了"？)

How Do I Know When I Have "Enough"? (如何知道你的退休金"夠了"？)

Source: Root Financial

Many people, regardless of how much money they have in their portfolio, never feel like they have “enough” to retire. What is enough and what does that look like for each of us? 

Unfortunately, it can't be distilled down to a single number. It's something very specific to you.

In today's video, James Conole will walk you through how can you think about what enough means for you so that you can apply this to your own personal financial planning to create that peace of mind that we're all looking for and so that can fully enjoy your retirement.

Learn the tips & strategies to create your secure retirement.

⏰ TIMESTAMPS

00:00 - Introduction

1:27 - What is "enough"?

4:31 - What's Most important To You?

7:34 - How Much Do We Need?

9:58 - What is Sufficient Protection?

12:34 - Living Intentionally

15:14 - Focus On Your Numbers

17:02 - Contentment and Growth

17:51 - Working With Us

0:00

Many people regardless of how much money they have in their portfolio

never feel like they have enough

and when you don't feel like you have enough

there's no amount of money that gives you that peace of mind

that you're really searching for to feel content with what you have

so in today's video

I'm going to walk you through how can you determine what enough means for you

so you can fully enjoy your retirement

0:20

hey everybody I'm James Canole

founder of root financial partners

and I'm here to teach you what you need to know to create a secure retirement

0:29

there's a classic story that a lot of people love to tell

and that's a story of Joseph Heller who's the author of catch 22

and his friend Kurt Vonnegut

and they're at a party in shelter island hosted by a billionaire hedge fund manager

now Kurt Vonnegut he reaches over

he says to Joseph Heller

he says

this hedge fund manager made more money in a single day than you made in your entire career from sales of catch-22

to which Joseph Heller leans over in response

Yes but I have one thing he will never have

"Enough"

1:00

and there's something about that story that hits us of that feeling of having enough

that contentment

that peace of mind with understanding there's no longer that striving or that reaching or that sense of having to be somewhere else to get to where you want to be

but what is enough

what does that look like for each of us

unfortunately it can't be distilled down to a single number

it's not a million dollars or two million dollars or five million dollars or any number of dollars

it's something very specific to you

so in today's video i want to walk you through how can you think about what enough means for you

so that you can apply this to your financial situation to create that peace of mind that we're all looking for

1:38

to me that first step in having enough is changing our mindset and changing the way we think about our portfolio

because enough to me is a mindset

and to get to where we want to be and to experience enough

we need to make a mindset shift

and that mindset shift comes in terms of how we view our portfolio

as long as we view our portfolio as "the thing"

we will feel like we never have enough

because our portfolio is "the thing"

maybe the first goal is to get to a hundred thousand dollars

then it's 500 000

then it's a million

then it's two million

then it's five million

and the goal posts are constantly moving

2:12

so when we view our portfolio as "the thing"

the goal is to increase this

enough is going to be elusive

enough is never actually going to come

because there's always going to be someone with more money

there's always going to be someone with a greater portfolio balance

there's always going to be someone who's getting a greater rate of return on their money

so it's a mindset shift from thinking about our portfolio as "the thing" to thinking about our portfolio as "the supporting thing"

the thing that supports what's actually most important to us

financial independence

providing for our family

being able to protect against what could possibly happen over the course of our lifetimes

so right now

what I want to do is walk through a framework of how do you determine what your number is

what your enough number is

not to say that you have to stop there or keep it set in stone

but just a way a helpful way of thinking about this to determine what you actually need

3:03

there's an author and a financial professional named Brian Portnoy

and he has a book called the Geometry of Wealth which i have not read yet

but he uses a term quite often and the term is called "funded contentment"

and he may use the term a little bit differently

again I have not read the book in the specifics of how he uses it

but i really love that term "funded contentment"

the thought of what are the things that are going to make us content

what are the things we're actually trying to plan and save and invest for

and how do we have a plan in place to fund those

so to me

the goal of how do we determine what is enough for the the process of determining what is enough

comes from something like that a "funded contentment"

3:40

so step number one of how do you fund your contentment

how do you get enough

well number one is start with what is it you're trying to ultimately accomplish

is the goal to have a million dollars in your portfolio

or five million dollars

or 10 million dollars

if so

that's probably going to be a fairly empty goal when you actually get there

because once you get there the goal posts are just going to move

you're going to want more

you're going to feel like you need more to get to that feeling of enough

but if the goal is actually to fund a lifestyle

or to take trips

or to provide for your family

or to be able to leave work

or to be able to do the things that you want to do

now we can view our portfolio in light of how can that support those goals

and we really can get to that amount

so let's look at this

how can we go through the process of understanding this

number one

the first thing you do is set the money aside for a second

disregard your 401k balance

disregard how much you have in savings or investments or net worth

completely ignore that in step number one

4:35

step number two is ask yourself what's most important to you

is it financial freedom

is it sending kids to college

is it buying your dream home

is it legacy to family or to charity

is it protecting against what could go wrong

start there

start with what are actually the things that are most important

actually most valuable to you

4:54

step three is now determine how much you need for all these things

how much do you need to fund the contentment that would come from each of those things

so let's start with financial freedom

I'm going to walk through a very basic exercise

I know none of these are going to be specific

there's a whole lot more nuance and details that go in it

but start with financial freedom

how much do you need to feel financially free

maybe at 70,000 per year of income would allow you to step away from work

do what you want to do and be fully content with that lifestyle

well okay

how much that is maybe coming from social security right off the bat

well 70,000 is your goal

your financial freedom goal

if 40,000 for example is coming from social security per year

the rest the 30% or the 330,000 that needs to come from your portfolio

so you could do a simple calculation

the 30,000 needs to come from your portfolio

what does that portfolio base need to look like to generate 30,000 per year

well you could use the rule of four percent to say

30,000 divided by four percent equals seven hundred and fifty thousand dollars

meaning if you had seven hundred and fifty thousand dollars

using the rule of four percent that could generate thirty thousand per year

which on top of social security forty thousand per year

could get you that 70,000 per year of financial freedom

obviously this disregards taxes

this disregards different things

there's a whole lot more details to that

but just a basic exercise to say a financial freedom is the goal

now we can start to get to a number of how much do i need in my portfolio to fully fund that

and to be content with my number

or to be content with what financial freedom looks like

that's the first step

6:29

now

financial freedom or retirement might not be your only goal

maybe it's buying a dream home

well

what does that look like for you

is it downsizing what you currently have and being able to pay cash for something in an area that you really love

is it having to save up another 100,000 or 200,000 or some specific amount to get there

whatever it is

think of what that amount is needed in setup or set aside a different amount to fully fund that

same thing for college

how much do you want to set aside for children or for grandchildren

come up with these different numbers

so that as we have these different goals

financial freedom

home

college

protecting against what could go wrong

legacy

we can start to assign a dollar value to each of them

to understand how much do we need total to be able to fund all these different things

now all these different things some may be important to you

some may not be

the thing is

this is unique to you

and this is why no one has the same exact number

no one has the same exact version of enough

because everybody's unique

so I'm just using these as an example

but understand which are most important to you

in which would you like to apply to your specific situation

now let's go to legacy

for example

let's assume you want to be able to leave five hundred thousand dollars to each of your two children

so you need to have a million dollars in your portfolio

well that 750,000 that we talked about

there may be some left over at the end

there may not be

we're kind of figuring out how much did you need to set aside to fund your financial freedom

well if you want an additional million dollars to be able to leave to children or to charity or to whatever it is

think about that too

let's assume that you plan to have a 30-year retirement

obviously none of us know how long we're going to live

but assume that as a starting point

well if you only five hundred thousand each of your two children

disregard inflation for a second

that would

that million dollars needs to come 30 years from now

well you have a time horizon

or that even though you're retired

you have a long enough time horizon where you could probably afford to invest pretty aggressively over that time horizon

if the goal is legacy and leaving funds at that time

you have a 30-year time horizon

well if you use a financial calculator

what you'd find is

if you grow eight percent per year on average

of course some years are higher some are much lower

if you grew at eight percent per year on average

if you were to set aside a hundred thousand dollars today

that would grow to one million dollars in 30 years

8:51

so going back to that funded contentment

or how much do you need to have to have enough

you need 750,000 for your financial freedom goal

to generate the income you need to live comfortably

you might need additional 100,000 to be able to provide the legacy

assuming there's nothing left from your 750 when you're no longer here

and then you might also think about something like protection

so what if protection or providing or protecting against what if there's a premature death

what if there's a health event

what if there's a long-term care event

well how do we set aside an additional amount to protect against that

you're not going to have that sense of financial peace if you're constantly worried about

I know that we can spend today and I know that we're comfortable today

but what if one of us needs long-term care

what if there's a need for a skilled nursing facility

those types of things can keep us up at night even if we have enough income to meet our needs today to fully retire

so think about that as a separate goal

and for example maybe you want to be able to self-fund a long term care event

so what if you want to have 500,000 set aside in 20 years

knowing that you don't have long term care insurance

again this is just an example

if you want to have 500,000 set aside 20 years from today

to be able to fund assisted living or to be able to fund a nursing facility

whatever it might be

well if 500,000 is a goal 20 years from today

if you set aside funds today going to eight percent per year

you need to set aside about a hundred and seven thousand dollars

because that hundred and seven thousand dollars growing at eight percent would give you five hundred thousand dollars twenty years from today

which is almost like your long-term care insurance except for your self-funding

if you don't get eight percent per year growth

but maybe you get six percent per year growth

well instead of needing a hundred and seven thousand dollars today to give you five hundred thousand in twenty years

you would need a higher amount to start with

because you're not getting as much growth on that money

the amount that you would need is a hundred and fifty six thousand dollars today

which growing at six percent per year on average would give you five hundred thousand dollars for long-term care

a one-time lump sum amount if you needed that money

10:55

so now as you think about how do I fund my enough

how do I fund my contentment over time

you have 750,000 that you need for your retirement income

you have an additional 100,000 that you want to have for legacy money

money if you want to provide 500,000 for each child

again just an arbitrary example

at the end of your retirement and then you'll need an additional 150,000 for long-term care protection so 750 plus 100 plus 150,000 that equals a million dollars

which means once you have a million dollars in your portfolio

plus if there's an additional amount for college or for dream home if you want to add that on too

but that kind of gives you your enough

now once you work through this exercise

there's a very basic approach to it

obviously your numbers are going to be different

your numbers are probably going to be a little bit nuanced and detailed

I'm just using a very high level overview

but once you know what that number is

you can begin working through the exercise to see when will you be on track for that number

you know

if your number is a million dollars

and today you're at eight hundred thousand dollars

or today you're at five hundred thousand dollars

what you can start to see is based upon how much longer you plan to work for

and how much you're saving in some projected rate of return

how much longer until you reach enough

now

once you hit this number

you have enough

12:14

obviously this is an over a simplification

this does not factor in how are you invested

this doesn't factor in tax strategy

this doesn't factor in maximizing social security

this doesn't factor in how do you take withdrawals

just a very high level overview

but it is helpful to know what is your enough

the reason that's important is

once you have enough

you can start to look at life a lot more intentionally

are you continuing to work and save and grow your portfolio

because you love what you do for work and you want to continue to work

and there's no desire to step away

wonderful

but once you've hit enough

if you're working a job that you don't enjoy

or if you're working a job that's preventing you from spending more time with your family

or doing more things when you have your health

or doing more things when you have your energy

or if you're working a job that is literally deteriorating your health because of the stress and the burden of the long hours

you have to start to ask yourself what's the cost of continuing to work

what am I giving up by continuing to add to my portfolio balance

in terms of years I'm taking off of my life

or health that's degrading

or my inability to do the things that are actually most important to me

so having that sense of enough is very important

because it gives you a framework to view what's actually most important

and to understand the trade-off of financial planning is not about growing your portfolio balance forever and ever and ever

it's about understanding what do you need from your portfolio balance

or what you need to be doing to support what actually matters

because it goes back to that mindset shift

if the portfolio isn't "the thing"

the portfolio is the "supporting thing"

and how much that supporting thing do you need to accomplish

what's actually most important

now here's the thing

it's not bad to continue growing your portfolio even after you have enough

like I said

the goal here isn't you don't go to work just because it gives you a paycheck

now sometimes you do

if you don't enjoy what you do for work or

if there's other things you'd rather be doing

then yes

that becomes the primary goal of work is to have a financial means of supporting what you actually want to be doing

but you can have enough and keep growing

this isn't me telling you to go through this exercise and if you have more than that enough amount

to go turning your two weeks and fully retire

it is me telling you to be very intentional about that though

but if you love what you're doing for work and you're continuing to save and you're continuing to grow and you just enjoy that growth aspect

there's absolutely nothing wrong with that

there's no one that should be able to tell you what your number is

and when you should stop and what you should be doing

only you can do that

but the theme of this is to be intentional with what you're doing

not doing it because it's something you've already been doing

it's sometimes easier to keep working to keep saving to keep growing to keep adding that

and there's a very strong justification

you can make it's very easy to justify

oh this will give me a more comfortable retirement

this will allow me to provide for my family more

this will allow me to protect my family more

all very rational all very reasonable all very noble goals

but at the end of the day

what's the trade-off that you're making for continuing to do those types of things

so what are the key takeaways from this

well number one

focus on your specific numbers

what do you need to do to get to where you want to be

number two

ask yourself the hard questions

work longer save more defer retirement

sometimes that's the easy way out

as much as work can be hard as much as work can be different

if we're just continuing to do that because it's what we've always done

it's what we spend the last 20 30 40 years of our life doing

it's hard but it's sometimes the easy way out

sometimes the harder things are asking ourselves a question like

what do I want to do with my life

what would I regret not doing if I continue down this path I'm currently going down

am I living the life I want to live and am I being intentional about it

those are really the hard questions of making sure you're doing what you want to do

and not working because it's comfortable

and working because it's what you know

and working because it doesn't require you to look at life in a difficult hard way to see what you really want out of it

so once you focus on your specific questions

once you've asked yourself the hard questions

the third step is learning that contentment

and this again is that mindset shift

stop looking at your portfolio as the goal

who cares if your portfolio goes from five hundred thousand to a million to five million to ten million to a hundred million dollars

if you're not able to do the things that you wanna do

if you're never never able to fully enjoy it because you keep thinking in terms of more and more and more

it does not matter what that value is

that value is just designed to support what actually matters

so learn contentment by focusing on your portfolio as a means to an ends

not the ends in and of itself

when you can do that when you can stop

focusing on hitting that next milestone

and moving those goal posts and doing it again and again and again

you'll be able to learn the contentment of enjoying what you have

and knowing what you have

knowing what that can do for you

which is the most important piece

so can you be content while still continuing to work and grow and add to what you have

absolutely

but again contentment is a mindset shift

contentment is something that comes from knowing what you're enough is

knowing that you are on track to be there or already there

and they're living a life intentionally designed to support what you want most out of it