This week, the theme is how much money do you need to retire?

Each day this week, I’m breaking down this really big and important question into bit-sized pieces to help you better understand what it will take to retire with confidence, why the answer to this question is different for everyone, and how you can answer for yourself: How Much Money Do I Need To Retire?

Today I want to talk about something that really irks me about the 401k and retirement planning industry. Through research they have discovered that it’s a powerful motivator to get you to save for retirement by showing you how you compare to others like you. 

More and more when you log in to your retirement account you can see if your ahead or behind your peers - people with similar incomes and ages - when it comes to how much you’ve saved for retirement. 

When I asked one 401k company why they do this, their response was that it was based in research and effective in motivating people to save more in their 401k account, so at least they weren’t falling behind the jerk on the other side of the cubicle. 

While the end goal of creatively getting people to save more for retirement is worthy of praise, the tool used to motivate people was disappointing. At its core, comparison feeds on envy and jealousy, and feeling superior to those around you, and can quickly turn us into bitter, spiteful people if we don’t stay alert. 

As I’ve talked about in this podcast many times, comparing yourself to others, especially when it comes to money can lead you down some dangerous and unhealthy paths. As Rick Warren said in his book The Purpose Driven Life, “there is no win in comparison”. You either compare yourself to others, find you’re doing better and feel prideful and arrogant. Or you find you’re doing worse and you feel less-than and envious. There is truly no win.

So I encourage you to just focus on yourself when it comes to figuring out how much money you need to retire with. Your retirement nest egg, your income needs and lifestyle choices are unique to you, and should never be influenced by what others are doing. 

It is all too easy to fall into the comparison trap, so you’ll have to stay conscious of the tendency and temptation to make decisions based on a comparison to a particular person, a lifestyle, or some mythical American retirement ideal. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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