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Question:


I know everyone’s situation is different, but are there any general benchmarks for financial achievement, perhaps by age or by geographic location? How do I know if I’m on the right track?
-TryingToGage


Answer:


One yardstick of financial achievement is the amount of wealth that someone has accumulated in relation to how much he or she needs or wants. That amount varies from person to person, as you suggested in the preface to your question, and depends on a number of factors, including family circumstances, health, where they live and what sorts of comforts they have become accustomed to throughout their lives. It depends on age, too, as you also suggested, because the older you are, the more time you’ve had to salt money away and the less time you have left to do so before the money will have to be put to good use. That means retirement, to most people’s thinking, but along the way they face other big expenses, such as a home and higher education for their children.

Then there are the factors that remain out of anyone’s control, the ones that determine how much someone will be able to save. That includes everything from the economy and job market to interest rates and the performance of financial markets to changes in tax laws. If retirement is your main consideration when assessing financial achievement and you’re OK with ballpark estimates, you can try to gauge how much you’ll need based on your current expenditures and some reasonable adjustments. Will you have your home paid off and no longer be making mortgage payments? Will you be able to save on transportation and some food and clothing expenses by not having to go to work every day? Will you be spending more, on the other hand, for health care and vacations?

If you can come up with a reasonable figure for annual income, then you can use a retirement calculator – go online and Google that phrase, there are plenty of them – to get a rough idea of how big a lump sum you’ll need to have built up to draw that income each year and how much you’ll have to save each year between now and your projected retirement date to get to that amount. If you’d like something more concrete and formal, then have a financial adviser run the numbers for you. Having said all that, one shorter answer to your question could be that an indicator of financial achievement is if you’ve accumulated enough money to be able to focus on anything other than your finances.

-Conrad de Aenlle



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