A new book says we should know how much money we need for the rest of our lives.

    If you walk into your local Barnes & Noble, you're likely to see The Number among the usual pyramid of books. Because you deal in numbers, you might stop long enough to read its subtitle-A Completely Different Way to Think About the Rest of Your Life-or you may just write off the book as another pop-psychology-of-money phenomenon.
Any of these reactions would be a big mistake, because The Number is a potentially ground-breaking record of the many ways in which most of us will fail in retirement.
    The gist of the book is this: We all have a "number," the amount of money we think we must accumulate to get us through the rest of our lives with some semblance of dignity and comfort. Most of us don't know our number because we refuse to think about it, or we don't understand the true cost of sustaining ourselves over a lifespan that will last longer than any before it.
    In our defense, government and private industry have completely changed the rules on us. No longer can we depend on Social Security and defined benefit plans to guarantee us security. Perhaps that's not new news, but the degree to which the average Joe doesn't get this truth is astounding. Many of us are completely unprepared to financially fend for ourselves, says The Number's author Lee Eisenberg, author of The Number and former editor-in-chief of Esquire magazine.
    If there is scant chance of us meeting the old-age requirements of our numbers, maybe we can reduce our numbers? But how is that going to happen? Isn't the problem that we're free-wheeling spenders? Yes, he says, but if we would just take a closer look at our lives, maybe we could pare back our numbers, since a meaningful life isn't necessarily an expensive life.
    Profound. Kind of makes one think of our own life planning movement. And, in fact, Eisenberg interviewed George Kinder, as well as some other folks you'll recognize from our industry, in writing his book.
    After reading The Number, I decided to talk with Eisenberg and get his broader thoughts on the economic woes our clients (and some of us) will face.
    Drucker: Lee, I'm curious-who did you really write this book for?
    Eisenberg: I wrote it for consumers. The book explores why, with all our access to financial advice, we have such difficulty facing up to financial planning, in the second half of our lives in particular. I wasn't thinking about advisors as potential readers but, when the book came out, I started getting e-mails and phone calls from the planning community saying the book voiced a lot of what was on their minds, that is, why clients don't always take their advice. So advisors have turned out to be an important and gratifying audience.
Drucker: By reading The Number, I saw one of your themes-how the financial rug has been pulled out from under consumers-in a new light. Advisors take this for granted but, for the average guy, this is still a cruel joke waiting to be played.
Eisenberg: In the few weeks since the book came out, there hasn't been a day without a relevant headline. IBM announced it's freezing its pension fund. GM announced it is capping health care benefits. The Commerce Department just told us the personal savings rate is the lowest since the Depression. When 401(k)s came out, nobody issued a major press release saying, "These aren't just a good idea ... they're now a necessity."
    Drucker: But that's not yet clear to the masses. So you switch tracks towards the middle of the book and, after telling us how unprepared we are for the rest of our lives, you tell us things might not be so bad if we can just figure out our true purpose. How do you think this process will play out for boomers, who are generally assumed to be underfunded for retirement?
    Eisenberg: Boomers aren't only notable for being self-indulgent and profligate, but also for being fairly ingenious about redefining the culture for their own purposes. I think those who are forced to confront a different lifestyle will do it somewhat cleverly, by adopting and propagating values that will make it seem easier. For example, we may see a re-emergence of the "small is beautiful" theme that we heard in the '60s.
    Drucker: So this may play out in the form of the old '60s rant against materialism?
    Eisenberg: Exactly. We may see people downsizing to smaller homes or owning seven-year-old cars instead of the SUV fleets they now have. And they'll deal with all of this by saying it's a better way to live. Life is much simpler when there's less stuff to worry about. I talk about it in the book as "downshifting." There will likely be other new terms invented to make us feel better about it.

     Drucker: Are you a boomer?
    Eisenberg: Yes. I'm within six or seven months of being one of the first.
    Drucker: Don't feel bad. I'm right behind you. When I speak about it, I make a distinction between the first half of the boomer generation that was influenced by parents who not only lived through but remembered the Depression, and the latter half for whom this experience was vague or nonexistent. Do you see it that way?
    Eisenberg: I agree with that. The long time span used to define the boomer generation makes no sense culturally or emotionally. I don't know who invented that span [1946-64], but it's kind of bogus. And, although I write about boomers in The Number, I tried not to make it all about boomers.
    Drucker: Yet, advisors wonder about how best to appeal to boomers' needs to focus on their numbers? You talked with George Kinder and apparently believe life planning can play a role in that process?
    Eisenberg: I do believe advisors can help boomers adapt to lower numbers by helping them explore their values and untying knots they have about spending and saving money. Until they do that, it's not entirely clear what they're building a financial plan around other than the assumption of an ongoing and unchanging lifestyle focused on acquisition. I took George Kinder's three-day course with some skepticism, but came out of it absolutely and profoundly convinced that what Kinder was saying is right.
    Drucker: If The Number isn't just about boomers, what do you think this country needs to be doing to make its children aware of "The Number?"
    Eisenberg: I get that question at a lot at book signings, and there's no good answer other than we need to do a better job of teaching financial literacy.
    Drucker: How about the majority of Americans who are homeless as soon as they miss a few paychecks? Are they, by definition, excluded from any lessons The Number can impart, or is there hope for them?
    Eisenberg: The Number is speaking to the top 10% of America. For them, at least, there's financial advice out there to be bought; for the other 90%, advice is a serious luxury. I don't know why financial literacy isn't more important to us. At its most basic, it's just learning how to save and apportion assets.
    Drucker: Private industry has been trying to find the best way to educate consumers on 401(k) investing for five or ten years now. It has tried Web-based education like Financeware.com, employer-sponsored investing workshops, financial planning as an employee benefit. These are problematic because people have different learning styles, have different levels of financial sophistication and because neither government nor private industry want to be liable for the mistakes individual investors are bound to make. What's the solution?
Eisenberg: That's a great question and a huge problem. How do you get financial advice that isn't self-interested? Public industry hasn't figured it out and people don't trust the government. Many don't trust the financial services industry, either. There needs to be an impartial service to answer the many fundamental, financial literacy-type questions people have-a base curriculum for millions of workers. It's either got to come from government or private industry, and there's going to be controversy over whichever it is.

David J. Drucker, M.B.A., CFP, an independent financial advisor since 1981, now writes, speaks and consults with other advisors as president of Drucker Knowledge Systems. For more information, visit www.practicelifecycle.com.