The “What” of Retirement Planning

Most working-age Americans focus on the “how” of retiring: how to maintain a decent standard of living today while saving enough money for retirement tomorrow, or how to play catch-up and cover their retirement savings shortfall. Sadly, another group of Americans wonder “if” they’ll be able to retire at all. The sobering statistics tell a bleak tale. According to U.S. Census Bureau data, the average 50-year old has just $42,797 in retirement savings while 38% of Americans have no savings at all. This is scary stuff considering that average medical costs alone for an individual over 65 years old are north of $100,000. Clearly we’re not as prepared for retirement as we could be. Despite lots of media doom-and-gloom about the pending retirement crisis, it hasn’t improved retirement savings trends. Thus, I’d like to propose a new approach, one that focuses on the “what” of retirement planning instead of the “how.”

The “what” of retirement planning involves an intentional mental shift, one that approaches the retirement conundrum from a new angle. Instead of focusing on how much more you need to save or how far behind you are versus your peers, try imaging what you want your years in retirement to look like. What new hobbies would you like to explore in retirement? Or what countries do you want to visit? Etc… This approach, coupled with an honest assessment of your current situation, is more likely to help you reach your goals than beating yourself over the head.

Focusing on the problem or what’s missing can increase stress levels and sap your energy – because you need more energy to help manage those higher stress levels. It can also lead to financial paralysis, which only exacerbates the problem and reinforces our old, unhelpful patterns – ensuring we get what we fear the most: not enough retirement savings. In contrast, anchoring your goal to the positive end result – your vision of a relaxing, meaningful retirement – can increase the odds of realizing that reality. Either way, you’ll feel a whole lot better on your journey there.

The point is to look carefully at the way in which you approach your retirement goals, because the methods you use will help determine your success rate. It all starts with taking an honest and sometimes difficult look at your current situation and determining what your goals are. Once you know where you are and where you’d like to be in the future, crafting a plan of action that will reinforce helpful, constructive habits is key. This brings me to one of my favorite quotes from St. Teresa of Avila, “The whole way to heaven is heaven itself.” A lifetime of berating ourselves is unlikely to lead to financial bliss in our twilight years. It will probably just lead to more stress and anxiety. Instead, it seems we’re better off focusing on “heaven” in the here and now. We can do that with a proactive, realistic plan that’s anchored on the positive feelings we’d like to experience in our retirement years. And who knows, we might even start to feel better today.

Carrie A. Tallman, CFA
Director of Research

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