This week, Money360 takes a look at Lee Eisenberg’s , a frank, well-written, and entertaining book that addresses the one number that so many of us obsess over: the amount of money we each need to live the rest of our lives the way we want to.
The first third of the book, subtitled “Chasing It,” is more of a sociological study of The Number rather than a practical analysis. It focuses on upper middle class individuals, mostly Baby Boomers, trying to figure out what to do with the rest of their lives as they approach the traditional retirement age, and The Number is what that “retirement” will cost.
During this portion, Eisenberg breaks out a few interesting sociological profiles and ideas from the heap of Boomers. First, he identifies four distinct psychological profiles of people dealing with their Number:
- The Procrastinator, who puts off thinking about it at all
- The Plucker, who basically picks numbers out of thin air – but at least they’re thinking about it
- The Plotter, who is carefully calculating their number in various ways
- The Prober, who seeks fulfillment and sees The Number only as a means to an end
After this, things get more interesting. Based on meeting people who fit these profiles and associating with other upper class and upper middle class Boomers, Eisenberg defines five basic principles that explain why people don’t bother to worry about the future (excluding the big ones of death and annihiliation):
- The uncertainty of living in a world awash in debt, where everyone’s in debt and there’s no social or peer pressure to improve things.
- The uncertainty of not knowing how money works.
- The uncertainty of watching old retirement support structures dying away.
- The uncertainty of watching retirement benefits vanish due to bad corporate management or a bad stock market.
- The uncertainty of being unable to see the big picture.
Basically, these all come down to one thing: lack of fundamental personal finance education for most people. Though Eisenberg avoids saying so, he hints time and time again that people are woefully uneducated about money.
The part of this section that I really identified with, however, was that describing “the lost years.” The figurative lost years refer to a period of time in which the writer spent without any consequence, racking up debt and not planning for the future. The author had a period of about two decades of “lost years;” mine was about five. Yet I still understood every word he was saying in this part of the book: those lost years cost you for a lifetime. If I had been saving during my lost years like I am saving now, I would almost completely own a home. That’s not only alarming, but it makes me ashamed of that mistake more than anything else in my life.
Tomorrow, well look at figuring The Number.
The Number is the tenth of fifty-two books in Money360’s series 52 Personal Finance Books in 52 Weeks.