When planning for retirement, setting goals is important. It means you have an idea of what you want your life to be like when you’re entering your golden years. But having the right goals is essential. Writing them out will better help you achieve them.

Merely saying, “I want to retire rich” is not good enough. Better is something specific, “I want to have $1.4 million in investments that I can withdraw X% each year.”

But what about goals regarding the asset value? If you have the financial angle already worked out, asset valuation at retirement might be useful. But if that’s your primary goal, then I think you’re putting the cart before the horse because you can’t eat your assets.

That was my immediate reaction to Redditor Alternative_Ear_9473, who asked on the r/ChubbyFIRE subreddit whether he was on track to reach his asset value goals. That’s a Reddit board devoted to financial independence and early retirement while still enjoying the finer things in life.

He noted he and his wife are in their early 40s and want to have $5 million in assets by the time they are 62. They have $550,000 in a 401k, $120,000 in mutual funds, $60,000 in a health savings account, over $1.1 million in houses (including offshore homes) with just $150,000 in mortgages remaining at 2.3% interest rates. They also own $150,000 in residential land in Texas, $20,000 in gold, and $30,000 in cars. He wants to know if they are on target.

To me, his priorities are misplaced.

24/7 Wall St. Insights:

• Having goals for retirement are important, but only if they are the right ones. Planning a financial target is important, but wondering about how much material things will be worth is less so.
• Without ensuring your finances are straight, what your assets are worth is meaningless, particularly if those assets don’t appreciate in value.
• Because you can’t eat your assets and will have to sell them to survive if you don’t have enough money, focus on that first.

Figuring out the primary objective

Because we only have a basic outline of their financial situation — what do they earn? Is there an emergency fund? Have college expenses been considered? — it’s tough to judge whether they are on track financially. Worrying about what things are worth at retirement seems secondary and a tad materialistic.

Without financial security, asset values are worthless because you may have to sell off those assets to survive.

However, they do have about $720,000 in investments saved so the couple is a step ahead of the game. They need to make sure they’re plowing enough money away during their work years to be able to enjoy the material things they’ve gathered.

But let’s assume they are doing that and see what their assets mean.

Focus first on productive assets

First off, cars are immaterial. They are a depreciating asset and should be assigned zero valuation. Since they are only worth $30,000, these are not classic cars that might be valuable at auction. 

Precious metals also have limited value. While gold presents an excellent hedge against inflation, it is not a high-growth investment . There have been long periods where its value didn’t appreciate. Gold is at record highs now, but that might not be the case in 20 years.

Land is excellent. As Mark Twain once noted, they aren’t making any more of it. And property in Texas tends to appreciate in value over time. The land is worth holding onto.

The homes look like they are almost paid off and should continue to appreciate in value as well. While the property in foreign jurisdictions could be another good investment, depending upon where they are located, how many do you really need? Maybe sell one or two and put the proceeds to retirement savings.

Last are the investments. Three-quarters of a million dollars is a nice nest egg, but doesn’t seem enough to retire on for an estimated 25 years or so, even if they live frugally.

Key takeaways

Planning on retirement with a specific asset value goal has minimal value if you don’t also have financial goals in place. Putting material things over financial well-being is misguided.

While this isn’t meant to be any sort of financial advice, consulting with a financial planner can give you the best overview of your situation. But ultimately, I’d skip trying to hit retirement with a specific asset base and instead be shooting for a targeted financial goal.

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