Before you spend, earn.
Before you invest, investigate.
Before you quit, try.
Before you retire, save.

– William Arthur Ward

The Magic Number

Whole books have been written about how much money is needed to retire. Many websites have retirement calculators that will tell you how much you need to retire. This is the so-called magic number – the net worth you will need to retire. Based on this number, many calculators will even tell you how much you should be saving for retirement or how much you should be contributing to your (subsidized) savings plan. Other apps will calculate your retirement risk. They may calculate the odds that you will run out of money in retirement by a certain age, or they may tell you what investment mix provides the optimal risk for you. In order to properly discuss the magic number, we will need a little background information.