One of my favorite reads this year has been Michael Easter’s Scarcity Brain. In chapter four, “Why We Crave More,” he describes how we’re hardwired to think that having more—food, money, what have you—makes us safer. To illustrate the point, Michael uses the example of Dr. Leidy Klotz playing Legos with his son. Despite multiple advanced degrees in engineering, when faced with an uneven Lego bridge, Dr. Klotz went directly to the Lego bin to find more bricks. By the time he returned, his son had already solved the problem by removing Legos from the taller pillar.
Like Dr. Klotz, we tend to solve our problems by adding more to our lives: the latest apps, the coolest new gadgets, extra work or side hustles. We rarely consider how subtraction could be a solution. I often see this as a retirement advisor. People overcomplicate their retirement planning to the point where managing the system becomes the focus rather than its intended purpose of creating a great life.
We must strive for simplicity in our retirement plans so we can direct our attention to the work of living meaningful lives. In that spirit, I’ve compiled a list of things we should remove from our retirement planning.
1. Stop chasing confidence through increased precision.
This is a biggie! We have to stop chasing precision. I experience this all the time in my planning practice and Rock Retirement Club. We perceive that better spreadsheets or retirement planning software will provide a more accurate plan, thus giving us more confidence that everything will be okay.
Want some examples? Stop fiddling with the tax estimate eight years from now because it “looks wrong.” Stop spending countless hours on the “perfect” Roth conversion strategy. Stop trying to figure out your Social Security strategy four years before you can make a decision. Stop attempting to nail down a travel budget for fifteen years from now.
These activities are symptoms of chasing precision. In all likelihood, most of your assumptions will be wrong. We have no clue what the numbers will actually end up being. Better to make an informed guess and move on, knowing that you’ll to have to revisit it when the decision gets closer. Why? Because you have a lot of other things you need to think about.
You need to think about your work and how you will transition. You need to start creating boundaries so you can explore life outside of work. You need to start figuring out what you actually need to spend on your desired lifestyle and where you want to live. Those are higher priority items than a decision on the horizon years from now.
I completely understand the urge to chase accuracy. I am recovering from the condition, too. I finally realized that it’s all going to change anyway—the rules, the taxes, the cash flow, and people’s preferences. Why exhaust ourselves trying to be more precise?
Releasing the pursuit of accuracy will save you time, emotional and intellectual energy, and stress, allowing you to focus on things that you have control over that have a more significant impact on your life. I’m not saying don’t work on your plan, don’t make assumptions, or don’t be thoughtful about it. Just don’t overanalyze it!
2. Stop making retirement planning your new job.
Somewhat related to number one is the false belief that overanalyzing brings us control.
I know people who look at their retirement spreadsheets every day, multiple times a day. They look at the markets and their assets every day, multiple times a day. On The Retirement Answer Man podcast, we followed a case study in Retirement Plan Live where the husband was so tied to his spreadsheet that it interfered with his marriage. Retirement planning had become his job because more time spent on his spreadsheet provided him with more (false) confidence. But those moments of confidence were fleeting, so his job was never done. This behavior can become addictive!
The point of planning is to rock retirement. It’s a means to an end and requires accepting a degree of uncertainty. You can’t figure it all out. That’s scary. It’s humbling. And some of us will never believe it. They’ll keep going back to the spreadsheets and making planning a job.
The more we can accept the unpredictability of the future, the better we can organize our plan so that we check back often, but not too often.
In our agile retirement process, we develop a retirement plan of record, where we determine what you want, whether it’s feasible, and ways to make the plan resilient. While we make a good faith effort to create reasonable assumptions, we know the numbers are not precise—because they can never be. We use structured check-ins, typically twice a year, to revisit the plan, revise it, and make little adjustments along the way.
Doing the work up front, where you declare, “This is my plan!” provides the freedom to live your life. When the unexpected happens—and it will!— you’re ready for action. Simply having a plan can free you from making retirement planning another job or obsessing about it. Adjust using your plan of record as your true north, and then iterate from there.
3. Stop optimizing for returns.
Shocking, I know. The financial planning industry flourished as the baby boomers were in accumulation mode. From graduation until retirement, the whole investing game has been about optimizing returns and wealth creation.
It seems reasonable to think that we will continue optimizing returns and then just put withdrawal rules on an “optimized” portfolio. Unfortunately, optimizing returns is not the ideal investment strategy for creating a great retirement. Higher potential returns won’t necessarily make your plan better, as they often come with higher risk (including volatility and execution risk, among others) and can hurt your retirement.
A lower average return with lower volatility could create better retirement outcomes. The problem with volatility is it goes up and down so much, right? If you have an investment that fluctuates less with a lower average return over 20 years, the fact that it doesn’t have the lows (which are the ones we care about from a risk perspective), can actually make your plan more resilient.
Attempting to optimize returns can overcomplicate your retirement; retirement should be about optimizing for your personal life goals.
4. Recognize that you don’t have to know what you’re retiring to in order to retire.
I often said it’s much better to retire to something than from something.
Well, I’ve reconsidered my stance.
My a-ha moment happened when my wife, Shauna, was still working in a very high-stress job. Despite me telling her that she could leave work, she was so deep in the cortisol rush of obligations, team building, and crisis management that she didn’t have the capacity to think of what she would do otherwise.
Finally, Shauna called me one day and said, “You’ve always said that I could leave work. Are you serious?” She put in her notice that day. After three or four months of job detox, she regained the mental and physical energy to think forward.
I use Shauna’s experience to highlight that you shouldn’t let the lack of vision for what retirement is going to look like prevent you from retiring. It is okay to retire to take away the pain. You don’t have to have a vision. You don’t have to have a purpose. You don’t have to have your daily schedule mapped out for the first six months after you retire. While having those things in place first is great, it is absolutely okay to simply take away the pain, realize that season of your life isn’t serving you, and then go through the work of figuring it out.
5. Stop thinking you can wait to do what you want in life.
Carpe diem is not a bumper sticker. Thinking about the future gives us momentary comfort without actually creating the life that we want. It’s easy to believe you have all the time in the world and delay your dreams. The truth is that you don’t. Tomorrow is not promised.
I saw this firsthand with my mother. It was her MO. She was overworked and stressed. She dreamed of a train ride through the Canadian Rockies. She told herself, “I’ll be able to do the things I’ve put off when I retire.” Sadly, she died at age 48 before any of those dreams could come true.
My mother’s death was unusually premature. But if you’re already in your fifties or sixties, we tend to think of our future selves like our current selves. If you’re 64 years old today, will you be the same person at 74? Look at yourself in the mirror. Think about the energy you have. Think about the relationships and interests you have. Now, imagine yourself in ten years. Are you going to be the same person? If you’re married, do you think your spouse will be the same person? Are they going to be able to do the things that they want to do? Are you two going to be able to do the same things that you want to do together?
Time becomes asymmetric as we age. So, you need to stop thinking you can wait to create the life that you want.
6. Stop resigning yourself to what is.
It’s not too late to pivot, reinvent yourself, move, change your friends, or change how you do things. Look at your life with fresh eyes. Let the past inform your decisions, but don’t let it dictate the future.
That could be where you live, how you organize your life, the activities you do, and the friends you keep. This freedom to pivot could permit different decisions around an unhealthy family of origin. The door is unlocked. The decisions might be uncomfortable, but you can still honor those relationships without letting them dominate your life. The same thing goes for friends, where you live, etc.
All the things we must stop doing are interconnected. We focus on over-optimizing and trying achieving precision, but we can never get there. So, we keep planning more and deferring more to feel more confident. We make retirement planning our job because we keep pursuing something we can never achieve. We keep optimizing for returns, which gives us a lot of volatility and makes us less confident. So, we keep postponing our lives.
You can’t do that. You just can’t. You’ll end up with lots of regrets. Don’t do that to yourself. Freeing yourself from these habits will simplify your life, not make it simplistic, and a simple, agile plan can help you make the most of the only life you have.