The Number | Lee Eisenberg

Summary of: The Number: What Do You Need for the Rest of Your Life and What Will It Cost?
By: Lee Eisenberg

Introduction

Ever wondered what’s your magic ‘Number’, the amount of money you need to save to maintain your lifestyle in retirement? In his book, ‘The Number: What Do You Need for the Rest of Your Life and What Will It Cost?’, Lee Eisenberg dives into the world of financial planning and retirement savings. This summary outlines various reasons most Americans fail to secure a comfortable retirement, delves into how the investment industry targets different wealth segments, and emphasizes the importance of understanding your financial goals. Furthermore, it explores the concept of ‘life planners’ who help individuals find meaning in retirement by focusing on money, health, and happiness.

The Importance of Knowing Your Retirement ‘Number’

Millions of Americans are facing retirement without any savings or plan. Many Baby Boomers don’t have enough money saved to maintain their current living standards in retirement. Despite these dire numbers, upcoming retirees continue to use their credit cards. However, most people are unwilling to share how much they have saved, perhaps because discussing money is seen as impolite or bragging. This lack of transparency makes it difficult to know one’s ‘Number,’ i.e., how much money one needs to save to maintain their lifestyle in retirement. The ‘Number’ is not something one should decide quickly but is influenced by career advancement and changing circumstances. Many fear “lifestyle relapse” and not being able to maintain their desired quality of life during retirement. Factors such as corporate expense account and community standing can also affect retirement planning. It is essential to understand what expenses your savings would cover and what additional expenditure you may face during retirement. The book highlights the importance of planning ahead and creating a “meaningful plan” for retirement to ensure a happy and fulfilling experience.

Realistic Financial Goals for Retirement

Many people approaching retirement have unrealistic financial goals, which can be attributed to procrastination, unreasonable expectations, lack of financial planning, or prioritizing self-improvement over financial stability. It’s essential to strike a balance between the two to ensure a secure and fulfilling retirement.

Wealth Transfer in Retirement

The retirement of Baby Boomers has prompted an estimated $40-$130 trillion wealth transfer, which has put the affluent Boomers in the crosshairs of the investment industry. The number of High Net Worth individuals is growing rapidly, and the retirement industry aims to support smaller sum investors via technology and low-cost distribution channels. However, there is disagreement on what defines “rich.”

Baby Boomers entering retirement have accumulated a significant amount of savings to transfer, causing an upheaval in the investment retirement industry. An estimated $40-$130 trillion will be transferred to offspring and philanthropies, primarily from the affluent Boomers who range from “mass affluent” to individuals with assets exceeding $10 million. The number of High Net Worth individuals is rapidly increasing at a rate of 16% annually. In addition, there are around 5,000 family offices in the US, managing finances for families with a joint net worth of over $100 million.

The retirement industry aims to offer support to individuals with smaller sums to invest through technology and other low-cost distribution channels. However, there is disparity regarding what categorizes someone as “rich” – a New York Times survey found that people consider individuals making between $100,000 and $200,000 per year as “rich,” while a Chicago wealth management survey found that rich individuals are the most pessimistic about the future. As such, financial services will need to rethink their approach as the retirement industry and wealth transfer processes evolve.

Retirement Planning

Retirement planning is essential but often overlooked due to outlandish spending resulting in debt. Americans are faced with tremendous uncertainty due to societal pressures, confusing information about tax codes, and disbursements. Financial advisers suggest patients in making informed decisions and balancing stocks and bonds wisely. Although selling a high-value home to capture net worth from it might be beneficial, it can also be a traumatic decision. Retirees also face uncertainty about their health, medical bills, and inflation pressures. While there are some things beyond retirees’ control, they can control their spending and withdrawals from savings, making diligent retirement planning critical.

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