A Better Approach To Retirement Planning

We all carry unique opinions about what we’d like our retirement to look and feel like. The challenge for all investors is to align our actions today with what we want our future to be. So, where do we get started?

Choices are great, though too many can be harmful. You don’t need ten alternatives to planning your retirement. More options don’t necessarily lead to better decisions. Instead, consider two or three choices based on your preferences. In my opinion, focusing on cashflows and where you want to spend your time are the two most important themes. Your retirement strategies shouldn’t be complicated.

Cashflows will evolve through retirement which can give our brains a headache. We crave certainty and answers in all our financial decisions. Retirement is a new chapter that can feel awkward initially as investing stops and spending what you’ve accumulated begins. So, how much will it take?

I encourage all investors to do the math early, before it’s needed. Will $10k or $12k a month of spending get the job done? Do you need more or less? Sure, Social Security plays a role in these numbers, but to what extent and when? Some retirees view Social Security as room for error while others require it as part of their plan. What approach are you taking and is your significant other on board?

It’s not uncommon for one spouse to be ready while the other isn’t so sure. College tuition, home renovations, and family vacations get more dialogue earlier because these decisions are imminent. Retirement planning isn’t here just yet, or is it? What might be possible if you created a conversation earlier than necessary?

Starting with the end in mind and working backwards engages our imagination. Individually or as a couple, you’re in charge of gaining clarity on what you want. Our imagination is very powerful; we become what we think about. Using future retrospection, investors can think about today as if they were looking back from tomorrow.

This leads to a higher engagement and a desire to have the right retirement on your terms. So, what financial decisions are easier for you today as if you were looking back from the future?

By ignoring this exercise, unforced errors are created and compound. This isn’t obvious in the moment, only years from now when it’s reluctantly admitted that starting earlier would have been so much easier. Regardless of your age, it’s important to verbalize what you think you want and map out a plan to achieve it.

A beginning dialogue doesn’t mean you need to have everything figured out. It starts with a rough draft, something to revisit and reflect on. This minimizes regret and leads to a narrowing of your choices over time through ongoing communication. It’s all about planning, which is an evolving conversation on cashflows and what you intend to do with your time.

Thinking beyond the numbers, what will you do with your time? What will fill your Monday through Fridays? This may include working in a second career or picking up new hobbies. Work gets a bad rap, but it does provide us with socialization and problem solving with others. When these skills evaporate from our daily lives, it can be challenging to have purpose and feel good about your decisions.

Some will choose to work out of necessity or because they are wired to keep working (I can relate). The key to a successful retirement is flexibility, practicing patience, and staying socially engaged as you control your calendar.

By talking often about your ideal retirement, you gain an understanding of how much is enough. Maybe this allows you to loosen your grip on chasing more? Money stress, anxiousness, and worry are all an outcome of not setting time aside and using your imagination to picture “your” retirement.

Do your future self a favor and spend fifteen minutes this week imagining your retirement. For extra credit, share your thoughts with your partner or a friend. You have the power to achieve what you want; the possibilities are endless. However, time is moving faster than you realize. Don’t delay, start a conversation today.

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