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Figuring Out How Much Is Enough
By Abigail Trafford, The Washington Post
March 2, 2004
An e-mail message from a reader pops up on the screen: "I'm told I need 1.5 million dollars to retire." The sender is 37 and he's already worried that he won't have enough.
When people talk about retirement planning, they mostly focus on financial planning: How much do you need to live out 20, 30, 40 years? Can you afford retirement?
But this line of questioning is backward. To be sure, economic security is a huge factor in My Time, that unprecedented period of vitality that comes after middle age but before old age. But just as important are the psychological and social assets that you've been building up over a lifetime. How do you pool all of these resources to support a new life?
Money is part of the equation. But the real question is more fundamental: What are you going to do in this new stage in the life cycle? The conundrum of "what next" has to be addressed before you can really resolve the question of "how much."
Martha Moffett of Lake Worth, Fla., has found her answer. "I call it 'just enough,' " she says.
Two years ago, Moffett retired from her library job at a publishing company where she earned about $57,000 plus benefits. A single mom, she had raised three daughters and worked at the company for 25 years. Before her retirement, she kept track of what she spent and estimated what she would need to cover living expenses. "It's a modest amount," says Moffett, 70.
Today she lives on about $35,000, including Social Security and a retirement annuity. "I've found what 'just enough' is for me. But when I tell my friends who are still working about this, they look at me as if I'm crazy. They think there is no 'just enough.' "
Each of us has to figure out our "just-enough" level. It's finding a balance between what you have and what you need to take advantage of these bonus decades -- whether that's starting a business, performing community service, caring for others, learning to dance or finding another job.
Some financial burdens are eased at this stage. Moffett's children are grown. Her taxes are lower. Her car is paid off. She's refinanced her house and cut back on expenses associated with working -- commuting, dressing a certain way, eating out.
All this allows her to pursue her creative talents. She's attended writing workshops and gotten involved in a community theater. She's written 160 pages of a novel that she hopes to finish this summer. She's had time to visit her grandchildren, who are spread out from California to England.
"I was far short of having a million whatever at the end of my working life," she says. But since retirement, "I've felt comfortable and secure."
She has Medicare, "which is great," she says. "My doctors like it so much. The billing is simple for them."
Social Security brings her about $18,000 a year. "That's a nice base to build on," she says.
This "nice base" is a critical part of your financial assets. It enables many people to carve out a new life in the bonus years. For those who have lived on the margins of society and worked in jobs with no health benefits, becoming eligible for Medicare and Social Security may bring unprecedented stability.
Yet focusing solely on money may also be a form of denial. It can lead you to tell yourself: I can't afford to leave this job. I won't even think about it. If you fix on a dollar amount, it's never enough. But once Moffett found her "just enough," she felt a sense of liberation. "I think 'liberating' is a great word. It's been a revelation to me," she says. "It releases me to think about other things and live every day in a more comfortable way."
Otherwise, you hang on in hopes of reaching some magic number. Until the jolts start coming -- a change in the workplace, a medical problem that demands attention, a shift in personal relationships . . . the birth of a grandchild.
The clock strikes. Maybe your job goes overseas and you are forced to retire. Or you are offered a retirement package you can't refuse. You run to a financial adviser and ask: How much is enough? And the financial adviser asks: What do you want to do? How do you want to live?
Copyright © 2004
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