"What's your number?"

It's the retirement planning question everyone asks. The magic figure that, once reached, means you're done — free, financially independent, able to stop. For some people it's $1 million. For others $2 million or $3 million. Often it's a round number chosen more for its psychological weight than any underlying logic.

Here's the uncomfortable truth: the number is almost always the wrong place to start.

Why targets mislead

Savings targets feel concrete and motivating, which is why the financial services industry loves them. But a target without a corresponding spending model is just a number.

A million dollars is:

  • More than enough if you live simply in a paid-off house and spend $40,000 per year
  • Potentially not enough if you want $120,000 per year in lifestyle spending with 30+ years of retirement ahead

The number means nothing without context. And the context — what kind of retirement you actually want to live — is the conversation nobody's having.

The better question

Instead of "how much do I need to save?", try: "how much does the retirement I want actually cost, and how do I build an income that covers it sustainably?"

This reframes the problem. Now you're not chasing an arbitrary capital figure — you're designing a specific income plan, and working backwards to what that requires.

The FLOW framework is built around this question. Floors, Lifestyle, Optionality, Wealth Transfer. Each layer has a cost. When you add those up honestly, you get a much clearer picture of what you need — and when you need it.

The 4% rule (and why it's a starting point, not an answer)

You may have heard of the "4% rule" — the idea that you can safely withdraw 4% of your portfolio per year in retirement without running out of money over a 30-year period. It comes from the Trinity Study, US research from the 1990s.

It's a useful rule of thumb. It's not a plan.

The 4% rule doesn't account for:

  • Your actual fee and tax situation
  • Whether you're investing in NZ or globally
  • Sequence-of-returns risk in the early years
  • Your specific spending profile (not everyone spends consistently year to year)
  • Whether 30 years is the right horizon for you

Use 4% as a sense-check, not a target.

Getting practical

Here's a more useful process than picking a number:

  1. Map your retirement lifestyle costs — what does the life you want actually cost per year? Be honest and specific.
  2. Identify your income floors — NZ Super, any defined benefit pension, rental income, anything that arrives regardless of markets.
  3. Calculate the gap — your lifestyle cost minus your floor income is what the portfolio needs to fund.
  4. Apply a sustainable withdrawal rate — based on your timeline, risk tolerance, and portfolio composition.
  5. Work backwards to a savings target — now you have a number that means something.

The number at step 5 will often be different from the round figure you started with. Sometimes more. Sometimes less. But it will be your number, based on your life — and that's the only version worth planning for.