This is the latest in a series of video interviews in which Pat McKeough gives his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies, including those for retirement planning, and still others focus on events that are affecting the markets and the economy. In today’s video, he replies to the many questions he receives on how much money people need to retire on. As he tells his personal Wealth Management clients, Pat explains, determining how much you need for your retirement is a lot more than just a matter of dollars and cents.

Q: Pat, we hear a lot these days about how much money people need to retire on. What do you tell your Wealth Management clients when they ask you about this?

Pat McKeough: I can help them guess—and it’s basically a guess—how much money they’ll make on their investments over a long period of time. We take a conservative value and you don’t really go too far wrong when you do that. But the thing is, you don’t know how much you need, because you don’t know what you’ll be doing. You don’t know how you’ll be spending your money or your time.

So I advise people when they ask that: let’s start by you doing a journal of every nickel you spend in some lengthy period of time. Then go back and think: is this an expenditure I want to continue? Is it something I need more of? Is it something I can do without?

And they’ll tell how you’ll spend all that free time you have in retirement. Many people want to travel more, but on the other hand they don’t need to drive the car to the office every day. So there are things that add to your budget and things that reduce it.

Another thing to think about, too, is that people are living longer all the time, especially if they stay active. So I advise people again that, never mind how much you’re going to make on your investments, think of something you can do during the day.

It won’t be as tiring as your career may have been, but it will give you something you’ll take pride in, something that you’ll enjoy doing. This could be volunteer work, obviously, but it can also be consulting. It can be something related to the arts, to music, to cooking.

But I think the most satisfied seniors or retirees you see these days are almost as active as they were back when they were working. Maybe they don’t have quite as much money, but they have time to do things and they kind of like the way they do it better than an employee or a contractor might have done it for them.

So just to answer the question, I think it’s something you should start to think about before you retire, but it’s not something you’re ever going to have a complete answer for.

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