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Posted by on Aug 8, 2014 in ETF Strategist

The Journey To and Through Retirement

By Roger Nusbaum AdvisorShares ETF Strategist

The other day a colleague asked me what my goals are. This was a very casual conversation (as opposed to something like a job interview). My colleague is a fair bit younger and been very successful so I think he was very surprised to hear that I’ve never been much of a goal oriented person.

Early on there were goals put forth to me that I had to meet or otherwise lose my job at that time and I had some successes and some failures. I’ve set out to accomplish things over the years and again, like most folks, there were some successes and some failures.

For many people retirement is very much a goal oriented pursuit. What’s your number? If you have a number then arguably that number is a goal. You are trying to meet that goal by saving some amount of money on a regular basis and you invest most of that savings in some combination of funds and individual issues.

If this is somewhat describing you then you have some sense of where you are in relation to your number. Are you 55, is your number $1.4 million with a time table for seven years from now? If that is you and you have $1.2 million then you have a pretty high likelihood of beating your number by a little. If that is you and you have $600,000 you probably have your work cut out for you which is ok. Based on just about all the studies that get published it seems like the vast majority of people have their work cut out for them. The reality is that a very small percentage of people have a sense of how much they need to accumulate and so have made very little progress but that is not on point for this audience.

What is on point is the scenario where you come up short of your number (goal) or your number turns out to have been wrong. Sticking to the $1.4 million example and assuming the 4% rule, $64,000 might have sounded like a lot of money and while it would be sufficient for some folks it may not be sufficient for all who thought it would do the job. Maybe they are just unlucky with one-off expenses. So, what then?

Ultimately having a number (a goal) makes sense for many (most?) people but when the time comes that you are actually living off of the portfolio, it will be worth whatever it is worth and any decisions will have to be based on that reality.

Based on the whole population someone who makes it to at least being close to a reasonable number has accomplished a lot. Much of the difference between getting all the way there and getting 80% could easily be circumstance (bear market at the wrong time, bull market at the right time and so on). The things we go over here like hobby monetization and the others could be thought of as trying to address that 20%; or 30 or 40%.

Perhaps being goal oriented does not resonate with me for the personal belief that life is about the journey not the destination. At some point, though we do get to a destination and we have to make do with what we have.