With finances there are countless numbers that you are bombarded with (note I didn’t say infinite, only countless (where countless means, countable but a HUGE amount of them)).
Magic Numbers are those that have special meaning to you, and some of those magic numbers in personal finance can be:
- Number of payments until a debt is retired
- How much do you owe until you are solvent (i.e. your total debt load is zero (not net value)) ?
- What is the MER for that “can’t miss” Mutual Fund that my buddy thinks I should buy?
- How much money you have in your pocket right now?
- etc., etc., etc.,
Right now, I am on a course learning about how my retirement might work, in terms of my pension and such, and I now have a new magic number: 60 or 65.
Unfortunately these are the age I must be to either retire with no penalties on my pension or retire with my full pension (again with no penalties), however, my guess is I may end up working past those dates, but this course suggests crunching through all the numbers to figure out whether you should keep working?
If you have RRSPs as your retirement vehicle, how do you figure out your Magic Number? Do you know your Magic Number? If not, why not? If you don’t know when you can stop working (or have a goal), when are you going to stop?
It is worthwhile figuring out your Magic Number(s), here are few to think about:
- How old will you be when you have paid off your Mortgage?
- How old will you be when you are out of debt?
- What is your effective rate of pay down on that debt?
- How old will you be when you retire? (or how old do you want to be)?
Just a few of the Magic Numbers you should be calculating (or figuring out how to calculate).