Retirement Planning

Emotional Maths

Emotional Maths

Emotional Maths…

Have you done the maths to calculate how much you need to retire?

If so, well done.

But now let’s see why those calculations are probably wrong. 


If you’re thinking about retiring, you’re going to need to do some maths.

Because you’ve got to work out whether you’ve got enough to retire and need the comfort that you’re not going to run out of money.

When we ask clients:

  • Have you done the maths?
  • How far away from retirement do you think you are?

Sometimes they’ll say, “Yes, I’ve done the maths and I’ve calculated that I need £200,000 by the time I’m 65”.

And whenever we hear numbers like that, we always think that’s amazing.

We can’t believe you did all that maths, for all the factors in play for retiring.

You crunched all those numbers, and it came out exactly at the round number of £200,000.

Not £199,000, £201,000, or even £200,000 and 50p.

You’ve worked out you need exactly £200,000.

Not only that, but of all the days it could have been, it happened to be the morning of your 65th birthday.

Now, what this actually tells us is that you haven’t really done maths with the calculator.

You’ve done it in your head, you’ve done what we call “Emotional Maths”.

Maths based on fear and anxiety.

You’ve splodged in the dark.

You’ve most likely thought:

  • How long do I think I’m going to live for?
  • How much do I earn now?

Well, let’s multiply that by that, now add a bit on, and that feels about right.

And do you know what?

It’s not a bad place to start, but the problem with it is you’re not going to retire on that are you?

It’s too unstable.

You don’t have enough faith in the numbers.

So, it sounds good to talk that way when you’re 55 or 60.

But then you get to 65, and you’ve got to put your notice in and you’re doing this based on some maths that you haven’t really done properly and was just a feeling.

The problem is you start backing away because you’re not entirely convinced by your own maths.

So, the point is it’s a good place to start, but it’s not really going to cut it to get you retired.

At Joslin Rhodes, we do the proper maths.

We can normally knock off several years of working life.

Because by doing the proper maths it’s often the case that you end up needing less money than you think you need… compared to when you just do the “Emotional Maths”.

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Emotional Maths

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