Will you have enough money for your retirement? Well, it depends on what you want to do in retirement and what that will cost. But there is more to the question than that.
There is a numerical approach to answering this question. When I was a financial planner, I helped people do the calculations. They wanted to know how long their money would last, based on their savings, investments, Social Security, and their future spending plans.
How much retirement income will you be able to draw from your investments? The calculations that I did used historic investment returns, taking their past variability into account. The result was a probability – the chances that there will be enough to last a lifetime.
When the calculation is all done, you still have to take your tolerance for risk into account. What if there were a 95% chance of your money lasting? That would mean a 5% chance that it wouldn’t. For some people 95% sounded great; for others, not so much. And if the chance of having enough were less, say 80 – 90%, what then? Or if it were more, such as 99%?
The numbers in a calculation about the future go only so far. You have to eat every day to survive, even during a pandemic when the possibility or reality of having less income can be quite real. Having a cash reserve available can be extremely helpful, pandemic or not, but that is based on your past behavior of putting “extra” money aside. You can only make decisions about what you do now for the future.
Having gratitude, faith, and hope helps to manage anxiety. The reality is that whether you are optimistic or pessimistic, life will go its own way. There will always be change and surprises to accommodate to – some negative, some positive.
A life driven by pessimism and fear is not much fun. I prefer to be an optimist. Having a positive attitude lets me participate in and enjoy life more fully along the way, however it all turns out.
What is your attitude about having enough for the future?