The Uncertainty of Retirement

We’ve heard from quite a few of you lately that the hardest part of planning for retirement is that you have no idea what you want it to be.  You’re pretty sure you don’t want to spend it sitting in a rocking chair and it’s looking less and less likely that you’ll stop working entirely the day you turn 65.  But beyond that, you can’t say for sure. 

That’s why we put the book Just Start: Take Action, Embrace Uncertainty, Create the Future on our reading list not too long ago.  Written by Leonard A. Schlesinger, president of Babson College, Charles F. Kiefer, president of Innovation Associates, and Paul B. Brown, who is a long-time contributor to the New York Times, the book is primarily written for those who are looking for entrepreneurial strategies.  But it addresses a familiar challenge: How to succeed at work and life in an increasingly unpredictable world.

Using both quantitative and anecdotal research, the authors identify a pattern common among entrepreneurs facing uncertain futures:

1.     Act

2.     Learn (from that action)

3.     Build (upon that learning)

4.     Act again

The authors contend that this approach is akin to serial experimentation, which mitigates risk and improves the likelihood of success by biting off small challenges and rapidly adapting to the learning that each experiment yields. 

We think this model has real potential in the context of retirement planning.  Unfortunately, the most common retirement “planning” strategies used today are:

  • Set It and Forget It: Contribute to your company 401k, make changes every few years (when prompted), hope for the best
  • Fire Drill: Put off retirement planning for as long as possible, panic as you get closer to 65, depend on Social Security

While the set-and-forget approach is preferable to the fire-drill, neither is wise. 

Taking into account that you may not be entirely sure of what you want retirement to be, and acknowledging that you are likely to experience a number of changes (good & bad) along the way, it makes sense to approach retirement planning in frequent small cycles like those described in the book. 

Here are some ideas to get you moving in small steps:

  • Find inspiration:  Talk to your friends and family about retirement.  Ask your friends how they’d spend their time in retirement and what they’re planning.  Ask those questions with your friend’s spouse or partner in the room.  Do their ideas of retirement line up?  If you’d rather do it online, try The Life Goal Challenge app on Facebook and invite your friends, family, and partner to do the same.
  • Take your best shot: Take what you’ve learned and get started.  Follow our guided goal-setting process for retirement and see where you land. 
  • Recalibrate:  It’s a good idea to go back through the goal-setting process at least annually to see if all the assumptions, attitudes and circumstances that shaped your goal and investment strategy still hold true.  But don’t wait for a year if something significant happens, like getting married, getting a raise, buying a home or having kids.  You can revisit the goal-setting process at any time. 

Retirement may still be something of a mystery to you but you’ll have made that first step and gathered some learning.  And that makes the next step easier.  If you get a chance, take a look at Just Start.  That counts as a step, too. 

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