The $2-million dollar bag of gold
Financial planners often throw around some number.. one that comes up again and again in planning articles is how much retirees should have in their portfolios for a 'comfortable' retirement. I often see the value of $2,000,000 floated as a good benchmark... with the implication that if you are not studiously stashing your nuts towards that goal then you're going to be in trouble.
My problem with the figure is that it cannot possibly be true for everyone.
Consider.
There are 75,000,000 (75 million) baby boomers starting to retire. If each of them had two million bucks it would equal 150 trillion dollars in assets.. which is about 10x the total market capitalization of the entire US stock market. (It's also about 10x the total US debt, and 15x the total US currency outstanding.. but who cares).
This number also assumes that no one else in the world is investing in the US.. not younger workers, not foreigners, etc.
No matter. We must all have two-million dollars, it has been decreed.
Whatever.
My point is that one should not blindly adhere to what they see in the press. Most of what is printed is barely fact-checked by the media powers-that-be.. as the above example indicates.
What is important is building an intelligent portfolio for yourself that can provide a reasonable stream of income and stability through good times and bad: such as utilities, staples, real estate, and commodity exposure, for starters.
But the next time a planner tells you what your total should be.. ask them to multiply that figure by the total number of people and explain to you exactly how all that money is going to be created, invested, and tallied. The blank stare should speak volumes.
Financial planners often throw around some number.. one that comes up again and again in planning articles is how much retirees should have in their portfolios for a 'comfortable' retirement. I often see the value of $2,000,000 floated as a good benchmark... with the implication that if you are not studiously stashing your nuts towards that goal then you're going to be in trouble.
My problem with the figure is that it cannot possibly be true for everyone.
Consider.
There are 75,000,000 (75 million) baby boomers starting to retire. If each of them had two million bucks it would equal 150 trillion dollars in assets.. which is about 10x the total market capitalization of the entire US stock market. (It's also about 10x the total US debt, and 15x the total US currency outstanding.. but who cares).
This number also assumes that no one else in the world is investing in the US.. not younger workers, not foreigners, etc.
No matter. We must all have two-million dollars, it has been decreed.
Whatever.
My point is that one should not blindly adhere to what they see in the press. Most of what is printed is barely fact-checked by the media powers-that-be.. as the above example indicates.
What is important is building an intelligent portfolio for yourself that can provide a reasonable stream of income and stability through good times and bad: such as utilities, staples, real estate, and commodity exposure, for starters.
But the next time a planner tells you what your total should be.. ask them to multiply that figure by the total number of people and explain to you exactly how all that money is going to be created, invested, and tallied. The blank stare should speak volumes.
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