How to Escape the Retirement Worry Trap
Whatever you're doing to prepare for retirement, it's not enough. You're not earning enough. You're not saving enough. You're not taking enough investment risk. You're not willing to work long enough. You're not willing to downsize enough. Everywhere we turn we hear about inflation, longevity, healthcare costs, market risks and other retirement boogie men. The fact is you'll never be able to do enough to secure a risk-free retirement. Even billionaires aren't safe (seriously, Google it). So, we need to chill out a bit. Your retirement years aren't supposed to be full of stress. It's a time when we can work and play on our own terms after having completed a career of work and raising kids. Instead, for many, it's become the most stressful time of their lives.
Recently, I counseled a couple in their late 60s who were totally freaked out about their future. Although they had a healthy pension, substantial assets and no debt, they couldn't stop worrying about...well...EVERYTHING. As a result:
- The husband worked part time though he didn't enjoy it.
- They were afraid to spend money on little luxuries, even though they could easily afford them.
- They rarely traveled, though they loved to.
- They watched financial news constantly and fretted constantly about the markets.
They had gotten so caught up in worry, they were missing the only life they had.
Escape the Retirement Worry Trap
Tune Out Financial News.
CNBC, Fox Business News and their ilk do more harm than good. I threw them out of my life long ago and am a better advisor for it. These business news channels are in the business of ramping up our greed and fears so we stay tuned for their next "can't miss" update.
If financial news was a person, it would be that person we all know who LOVES drama and gossip and just can't wait to get others involved in it. Seriously, is that the kind of person you want to take financial advice from?
Turn off the financial news. Use your time wisely by reading or listening to books, blogs and podcasts focused on experience and reality, not advertising dollars.
Focus on Experiences, Not Things.
Everyday we are bombarded with marketing messages telling us we are somehow incomplete unless we have (fill in the blank). Honestly, I struggle with this. I love gadgets and am a sucker for the "latest and greatest." I've found the more I avoid stores and commercials the more content I become. When I do walk into a store or mall, suddenly I discover things I "need."
Things create financial cages that trap us. Buy a big house and you become trapped by the need to maintain, improve and furnish it. Buy a vacation home and your free moments become trapped by the pressure to "make use of it." Buy nice things and you become trapped by the need to get other nice things to complement them. See how it works?
Keep your financial footprint simpler, however, and you have more financial flexibility and can focus on what most research says makes us happier, experiences. When I ask my wife or kids about things they remember, it's always an experience, never a thing.
Most of us have, what a buddy of mine would call, "first world problems." When you consider roughly 60% of the world are without toilets or 64% don't have the internet (I wonder which my daughter would miss more), you realize how blessed we truly are.
Giving thanks can make you happier. In the book The How of Happiness, author Sonja Lyubomirsky, Ph.D., identifies gratitude as an essential habit for a happy life.
Create a Meaningful Plan and Review It Often.
The uncertainties that surround our life catch many of us in the retirement worry trap. On paper, we see that we are financially strong but then we start to think about inflation, or healthcare costs or the troubles in the world, and we get overwhelmed. Unfortunately, these uncertainties are just that, uncertain. No matter how much we try, we can't predict how or if they will affect our lives.
The only way I've learned to deal with all of this uncertainty is to embrace it. Embrace that you can't figure it all out. Doing so refocuses your efforts from trying to predict the future to creating a plan to manage the uncertainty one step at a time.
Unfortunately, traditional financial planning often creates plans with tons of pages, full of meaningless jargon focused on projections far into the future. These plans may give you an immediate fix of peace, but they quickly become meaningless as they collect dust on a shelf. Then you fall back into the retirement worry trap.
Focus on creating a living plan that focuses your attention on the right things and one that gives you a framework to make lots of little adjustments as your life unfolds. A meaningful plan doesn't take a lot of questionnaires or reams of paper to create.
Here are the essentials:
- 1-year, 3-year and 5-year priorities.
- Current and expected income sources.
- Current and expected lifestyle budget (including extraordinary expenses).
- Net worth statement.
- Insurance summary.
- Communication plan:
- How often you'll review.
- What you'll review.
- How you'll make adjustments.
You Can Create a Great Retirement.
Abraham Lincoln said, "People are about as happy as they make up their minds to be." Whenever I start to fall into the retirement worry trap, I remind myself of this and redirect my focus back on things I can control.
It's up to you to create an amazing life. The retirement worry trap robs you of today. Hopefully, these strategies will help you on your journey to creating a great life.
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Question: What is your best strategy for escaping the retirement worry trap?
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