Can I Still Retire Early If I'm Not Good At Planning?
Written by Cassandra Garnett
July 10, 2018 |
When it comes to your retirement, there is not much that can replace a solid plan.
Retirement planning is complicated stuff. There's math involving compound interest, savings amounts and inflation. There is risk and understanding the impact of decisions a future lifestyle you cannot precisely forecast. And there are social entitlements to consider that may be important in knowing for trying to determine savings rates and when a reasonable retirement date can be set.
So what are you supposed to do if planning is not your strong suit?
Dig Deep
Sometimes, you just have to grit your teeth and tough it out. You will find tons of online resources to assist with retirement planning, as well as reference books that can help you with details in both how to plan and how to stick with a plan until retirement. If your desire to retire is strong enough, it should be possible to overcome an aversion to planning. After all, other people seem to have figured this out. Granted, they may have benefited from a little HEFA (HElp From Above) in the form of an inheritance, severance package or even lottery winning. But achieving retirement and staying retired require planning and sticking to the plan for the log haul.
Digging deep if you lack the skills to plan will also give you confidence to know you can do it. And by crafting your own plan, you will have greater confidence in it, and be more likely to stick to it. Retirement planning is a lot like dieting. If someone else tells you what to eat, the novelty might work for a while, but eventually if you don't have a sense of ownership in the process, you will likely stray and end up where you started when you tried the diet in the first place.
Planning your own retirement by digging deep will also force you to confront the notion of risk as it relates to retirement planning. If you don't plan your retirement, you are bound to make optimistic assumptions that are not well thought through. By performing the planning yourself, you will see the numbers during your calculations to realize the impact spending today has on long term results.
Pass The Torch
Calling in the pros is never a bad idea when it comes to planning your retirement. Even if you attempt to dig deep and plan your retirement yourself, it still makes sense to have it reviewed by a financial professional. They will make sure that you have not overlooked a critical element necessary for a long and fulfilling retirement.
Getting assistance from a professional at your bank may also make savings more seamless. Banks often have automatic fund transfers into savings accounts. These transfers can be to guaranteed investments as well as mutual funds. If your risk profile permits it, you may be wise to consider investing in an index fund. Most banks offer an index fund option in their portfolio of mutual funds.
Index funds are typically inexpensive relative to other funds in terms of management expense ratio. And since they mirror an index of the stock market - such as the S&P 500 - you will enjoy returns that keep pace with the market. You will not have years where you significantly outperform the market, nor will you have years where you significantly underperform the market. For long term retirement growth, this relatively safe approach to investing offers an ideal balance of risk versus reward.
By having your investments made automatically once your paycheck is deposited at the bank will come to be normal in your spending cycle. Getting into that mode of cruise control is very important when it comes to retirement planning. If left to their own devices even those with highly refined planning skills would still run the risk of missing an investment deposit. With that deposit automated, there's no planning required to ensure that your savings grows.
Compromise
If you so struggle so much with retirement planning that you cannot overcome your limitations and dig deep and you can't even bring yourself to call in help, you may need to accept that your retirement will involve compromise.
For many Americans, this form of compromise is debt. 44% of Americans over the age of 65 have some level of debt. Funding retirement with debt ensures that the cycle of indebtedness will never end. This is due to the fact that no new earnings are possible in retirement unless the retiree is prepared to return to work.
A willingness and ability to return to work is a compromise many retirees face today. In some cases the reason is attributable to fallout from the Great Recession in 2009 when the life savings of many retirees went up in smoke. But for retirees who either weathered the 2009 recession or had no assets to lose during that time, the real culprit behind their requirement to work in retirement is a lack of sufficient planning.
Working in retirement is not necessarily the end of the world. In the rising Access Economy, retirees are well poised to take advantage. Services like Lyft or UberEats offer retirees a simple working opportunity that they can help control. With access to a car, and time on their hands, working in this capacity may match perfectly with a desire to continue to interact with people on a short term basis.
Summary
If you lack planning skills, you may need to tackle that limitation head on in order to retire comfortably. Digging deep will give you a greater appreciation for the nuance of retirement planning and the impact of spending today on your long term goals. Bringing in a professional - regardless of your planning skills - is always a prudent idea, and the result may introduce a level of automation to your savings program that help ensure your retirement plan is close to fool-proof. And if you can't bring yourself to either of those options, you may need to recognize that your retirement will involve compromise. Fueling your retirement with debt will ensure the cycle of indebtedness continues, and will likely result in a return to work. If so, however, there are some working options like Lyft and UberEats that may fit in nicely with your retirement lifestyle.
Do you lack planning skills? How did you approach getting ready for retirement? Did you use the services of a professional? Did you compromise in your retirement? Or did you dig deep and enjoy success from that effort?