One of the more interesting bits of advice I saw today as I perused the personal finance blogosphere was a post from Money Ning. This post suggests that instead of trying to meet some large number for your retirement target (such as $1 million or $2 million), you consider the sort of income you will need. Here is what Money Ning points out about nest egg worries:
Therefore, an easier (and care free) way of thinking about retirement is to consider the income you could generate by the time you want to relax. For some, it could be $3,000 a month. For others, it would be $5,000 but you get the idea. As long as you have a similar amount coming in every month, you don’t need to worry about your nest egg at all.
The goal, in this case, is to start generating various revenue streams prior to retirement. While you might consider how much you want in a retirement plan to help provide you with some income, the plan is to start now to use some sort of passive income to begin generating the cash flow you need later. You want to set things up so that you transition from the need to work to earn an active income to a place where you eventually have enough regular income from such things as dividend investments, interest payments from bonds and even ad revenue from web sites or other residual earnings from sales.
While a nest egg can provide a certain amount of peace of mind, and can provide a valuable safety net, the bottom line is that wealth building may not be the best way to get to where you need to be for retirement. Perhaps what you really need to do is focus on monthly income so that you know that you have something coming in regularly — something that won’t deplete your nest egg.