Thought I would start the year with a philosophical article in posing the question when is enough, enough?
Establishing if you have enough for retirement is a simple exercise of figuring out the income you need to fund your lifestyle and then calculating the capital required in supporting this income using an expected rate of return, which is governed by your risk / return tolerance. Sounds like quite a mouthful, but straight forward, which is why I think there may be more to the question “do I have enough for retirement” than initially meets the eye.
A good starting point might be the favourite question of holistic financial planners, “what does money mean to you”? What is the definition of wealthy, is it the World Banks classification for High-Net- Worth-Individuals (HNWI) of $ 1 million? A friend of mine who has had his fair exposure to wealthy individuals believes that wealth is a state of mind. This seems to endorse my personal client experience where I have been asked the same question “do I have enough” by clients with very little and those with fortunes, which they will not spend in three lifetimes. The answer to the question is certainly not an arbitrary number based on a simple calculation, but something more.
So maybe the question is not “do I have enough” but rather “what does money mean to me”. Answering this question may unshackle you from a lifetime of financial slavery exploited by consumerism and the need to keep up with the Joneses. The person who earns more than he spends and is content with his life is wealthier than rich man who feels poor and will never be satisfied.
“Enough” is not a number it is a decision.
Mark Williams
Mcomm, CFP®, HdipTax
T. 021-205 1133
Email. service@mwwealth.co.za
