Feeling Like the Only One without a $500,000+ Nest Egg?

Fisher Investments, a financial advisory firm, is running an ad on the home page of the Washington Post (among others) titled, “Don’t Run Out of Money in Retirement.” The opening sentence: “If you have a $500,000 portfolio, download the guide by Forbes columnist Ken Fisher’s firm” for a “must-read guide” for “rebuilding your portfolio.” By implication, if you don't have a $500,000 portfolio, don’t bother them…

If you are feeling left out, you can take some comfort in the fact that you have plenty of company. According to Federal Reserve data from 2007 (most recent survey – before the carnage of the financial crisis), nearly 90% of U.S. households have less than $500,000 in total net worth, a number which includes non-financial assets like your home. You can be sure that few have a $500,000 portfolio for Fisher Investments to manage.

You might wonder if the numbers look much different for those in age groups closer to retirement. Not so, according to the Fed. It turns out that the median net worth of those with a head-of-household 55 and older is around $250,000. Since “median” means half have less and half have more, you can imagine that those with a $500,000 portfolio are a small fraction of those at or near retirement age.

If you find yourself in this same boat with the vast majority of Americans, take heart: a comfortable and secure retirement does not have to rely on amassing the gargantuan nest eggs suggested by the investment advisors. Millions are successfully retired on far less and you can too. The trick is to plan a retirement lifestyle within your means. You have far more control over your spending choices than you will likely have over the investment returns on your existing portfolio, so put more of your energy into researching and evaluating your spending options in retirement.

Do not let the Ken Fishers of the investment management industry hook you with their misleading and self-serving obsession with the size of your nest egg. By all means, do what you can to grow your nest egg in the time horizon you have; however, devote more of your time to focus on a solid plan for spending that nest egg. The return on that investment of your time could be far greater.