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By Allison Berger

A few years ago there was a popular commercial about retirement. The ad featured people walking around town with their “number” over their heads. The number reflected how much they needed to save in order to retire. The commercial was very compelling because it really made people think, “how much do I need to have in order to retire?” It also broke down the very complex process of retirement planning into just one number that was very easy to measure. We can all look at our account statements and quickly see the value and then easily benchmark it to our personal number.

This benchmarking is still very common and we’ll frequently hear clients cite a number they would like to achieve before they are ready to retire. What’s your magic number? $1 million, $2 million? “Maybe if I had a pension,” you might think.  After all, a million dollars is not as much money as it used to be.


The sad truth is that any analysis that focuses on achieving a particular “number” before you can retire is flawed. This is because asset values will always be misleading since they are so skewed based on what is happening in the markets right now.  For example, would you have felt comfortable retiring with $2 million in the bank at the end of 2008?  What about 10 years earlier in 1998? The average investor would have likely felt a lot more confident in 1998 even though US stock market valuations were at all-time highs and the tech bubble was on the verge of collapse.

Alternately, the end of 2008 probably felt like a horrible time to retire even though it reflected the end of the worst bear market in US history since the Great Depression. Asset values were so depressed that it was an incredible buying opportunity and US stocks have more than tripled in value during that time, surpassing all-time highs over the 7.5 years that have followed.

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