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  • zetlmaier

Set Goals

A while back I was going through some old mementos and came across my 6th grade yearbook.  Apparently, I was going to be rich as a business owner and be a professional freestyle BMX rider.  While really into freestyle BMX, I didn’t have the ability or guts to be good at it.  I could do a few cool tricks though!  I do, however, specifically remember always saying that I was going to be rich as a businessman.  Few adults ever challenged that idea. The reality was that I never had a plan on how to do it nor did I have any role models to help envision what that might take.  What I did have was the “Work hard, do well in school, get a college degree, and good things will happen” message.  That’s great, but as we know, getting rich isn’t as easy as that.  It arguably takes some luck, but it also takes a plan.  I had a goal but no plan.  Setting goals and specific steps of how to obtain them is crucial.  Your goals may not be as lofty as mine were, but you may want to send your kids to private school, retire, switch jobs, buy a new car, or a litany of other things.

Let’s say you have a shorter-term goal of sending your kids to private school.  Have you looked at the overall cost?  Not just the tuition but the expected contributions at the annual auction and other fundraisers?  Have you looked at your budget to see if you can afford it?  Or do you just send the kid without thinking about it?  What about buying a new car?  Can you afford added or continued monthly payments in addition to the licensing and insurance?  Maybe you’ve been bitten by the travel bug and want to see the world.  I don’t know about you, but I don’t want to find myself broke in Thailand somewhere trying to figure out my next steps.  If you want any of these things you need to make sure you can afford them.  If you can’t, you’ll need to come up with a plan to cut back in certain areas or generate more income.

What about retiring?  How much do you think you need to retire comfortably?  The rule of thumb is that you can draw down 4% of your investments safely for 30 years in retirement adjusting for inflation each year. This is called the 4% rule.   Assuming most of us don’t have pensions to help with that, and who knows what Social Security may hold for younger generations, if you want to spend $10k per month or $120k per year for 30 years you will need to accumulate $2.3million in today’s dollars.  In 30 years at 3% inflation you will need $5.6 million accumulated which means you need to save $49,500 per year for those 30 years at an 8% annual rate of return.  That’s tough to do.  But, now that you know that you can adjust your goals to something more realistic.  Stretch that retirement to 40 years and you need $7.5 Million worth of future dollars and need to save $29,080 annually.   That’s still tough to do, but you hopefully now see the importance of starting to save for retirement early.

According to Bureau of Labor and Statistics, the average annual expenses for a family of two (2 spouses) is $76,500 per year.  Taking those numbers and applying them as a retirement guideline would look like this if we assume no current savings and no future Social Security, a retirement age of 65 and living until age 95.  Rates of return are 8% pre retirement and 6% post retirement:

Years Until Retirement

Future Value of $76,500

Total amount needed

Amount needed to save annually





















(Calculations are my own)

Retirement can be downright impossible if we don’t start planning 30 years ahead.  Finally, to drive things home, here is the average net worth by age as reported by US News from Federal Reserve numbers in 2023:

A couple things come to mind.  First, the largest component of net worth for Americans is their primary residence.  Stripping out primary residence is key unless your plan is to sell and significantly downsize at retirement.  According to Pew Research in 2021, White and Asian Homeowners report their net worths to comprise 41-45% of their total net worth.  Black and Hispanic Homeowners report 63-66% of their Net Worth attributable to their primary residence.  It doesn’t matter your race, we have a lot of money tied up in our homes and little saved outside!

According to these numbers, a 65 year old has $1,794,600 in net worth.  Let’s say 45% of that is their primary residence which leaves $987,030 from which they can draw, their liquid net worth.  The numbers are reported as per person so instead of spending $76500 per year as a two person household, we’ll split that in half at $38250.  In this case they’ll do just fine: ½ of $1,472,342 = $736,171.  No problem, right?

Wrong.  We’re looking at average numbers which are skewed toward high net worth individuals.  The median, the point at which half of Americans are above and half below is downright scary.  The Following were reported by Money Magazine in 2023:

Median net worth by age

  • Less than 35: $39,000 (+143% from 2019 to 2022)

  • 35-44: $135,600 (+28%)

  • 45-54: $247,200 (+27%)

  • 55-64: $364,500 (+48%)

  • 65-74: $409,900 (+33%)

  • 75 or more: $335,600 (+14%)


We can imply that over half of Americans will not be able to retire and spend at the average rate if their home equity is a substantial portion of their median net worth.  To be fair, I couldn’t find median household spending in the US.  This is my immediate thought of why Social Security cannot go away or be reduced.  It would throw the average American into poverty.  Politicians will never get reelected if this happens.

Regardless of the wrinkles you want to throw at my analysis, retirement takes goal setting.  It means thinking about how much you need to start saving at an early age and sticking with a plan for decades.  What if you are in a profession that requires physical endurance?  If you are working construction, delivering goods, chasing down criminals, or fighting fires, your body will give out at some point.  Some of those professions provide nice pensions still.  Some don’t.  If you are in a trade that doesn’t, you need to save…a lot.  You aren’t likely delivering packages or pounding nails until age 65.  If you can’t save a massive amount you need to figure out how to get into the management side or get into a union that provides a pension. 

I saw it with my dad.  He worked hard in the Roofers Union for years.  He stuck with it because they liked him, and he was able to get his Union Card quickly (according to him he got it within a week).  That wasn’t happening at the time in other trades.  As he aged and vested in the pension he realized he needed to slow down.  Finally, he got a much less strenuous job as a maintenance man for a large public school district.  He got into a new pension, and had a much easier workload.  The workload was so much easier that he got bored.  He actually wanted to be more active at work!  The point being, he was set for retirement because he made a plan and realized he wasn’t going to be able to pound nails for the rest of his life. 

People who are very successful set their goals and then figure out how to achieve them.  My first boss said to write down what you were going to do the next day.  Doing that reinforces you actually doing it.  When I set out to have my firm be completely independent, it wasn’t a rash decision.  I had a goal of being solo and needed to see what it would take.   It took roughly a year of planning then another year of implementation before I could hang my shingle.  I went over best and worst case scenarios for:  revenue streams, who may or may not come with me, costs associated with everything.  I also had to review our personal budget and take into consideration whether we could whether an income hit.  Not to mention I had to figure out compliance and other aspects of running a small business.  It took a lot of work and time.  It also means I’ll probably have to work longer which is fine.  I like what I do and it isn’t stressful on my body.  (Mom and Dad forced the idea if graduating college so we didn’t have to do manual labor. Thanks Mom and Dad!)  Once I had everything mapped out, I had to sell the idea to my wife.  Fortunately, she was supportive.  All of this took planning and goal setting.

Goal setting can be applied to everything: I want to lose 10 pounds, I want to get that promotion, I want to be a good parent…  I think about setting goals for every aspect of life.  I used to run long distances.  I have 8 full marathons under my belt and 1 half.  At the time it took discipline and training.  I had to map out runs, follow a training plan, eat healthier…  Every week of training was setting a goal, evaluating how I did, set new goals for the next week.  It consumed so much of my life and time, but it was worth it.  Now my body says no to distance running.  I might log 3-5 miles at a time 2 or 3 days a week now.  That training plan gave me mini goals each week.  Few people can just decide to run 26.2 miles with no training.  You have to ramp up your endurance.

Think about what you want to do.   Aim for the stars!  Then create mini goals to achieve to get yourself working toward the larger one.  You won't magically lose 10 pounds. If you cut your calories by 10-20% and exercise a little more, it becomes a reality. If you’re stuck in a dead-end job, what do you want to do?  Do you need more schooling?  What’s the cost, time commitment, and expected pay increase for doing this?  The payout is crucial.  Is it wise to go back to school for a general studies degree or is your time better spent learning a specific skill like accounting or coding?  If it’s a financial goal, check in with someone good at running numbers to see if it’s feasible.  I wish I could go back and give my 6th grade self some of the advice I’ve learned over the years.  Maybe I would have interned at a financial firm, or gone to a different school, or focused on getting my undergrad degree in Business rather than a Bachelor of Arts in Economics.  So many things!  Fortunately I’m living proof of figuring it out before it was too late.  And, fortunately I wasn’t dead set on ACTUALLY being a professional freestyle BMX rider!

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