“IT DOESN’T MATTER IF our planned trips might jeopardize our retirement savings.” The word “jeopardize” was spoken with a sarcastic tone.
It was clear my two financial-planning clients didn’t appreciate my message. They were adamant. Their 10 pricey National Geographic trips, which would span the globe, must remain on their bucket list.
So began a challenging chat. Based on their excitement about their retirement wish list, it would have been easier to simply applaud their exotic plans. The vivid travel brochures looked splendid to me. While appreciating their excitement, it seemed prudent to ask if they might consider one or two National Geographic expeditions combined with a few less costly trips.
Their response to my suggestion to cut back: “Absolutely not.”
I get it, we never know how long our mobility and health will last. This accomplished couple explained that, after a lifetime of hard work, these trips would be their grand reward. My questions about the future sustainability of their funds didn’t feel like pressing questions to them. They had little interest in reviewing other ways they might scale back their lifestyle, such as downsizing or moving to another state. Even raising the possibility that one day they might run out of money couldn’t temper their enthusiasm for their exciting dreams.
As it turned out, we never learned if they’d experience financial difficulties pursuing their wish list. Soon after our discussion, the husband came down with a chronic illness that made it necessary to be within a few hours of his Boston-area doctors. But the story didn’t turn tragic. This seemingly inflexible couple suddenly had no choice but to adjust their previous bucket list.
They identified exciting canoe trips accessible on New England rivers and found the best regional bird-watching expeditions. The new plans soon captivated them. In the following months, they sent me beautiful pictures of their trips and marveled about the many outdoor options that were available nearby. Out of necessity, they had rewritten their narrative.
I began to wonder how many other people require a major life crisis to increase their willingness to explore other possibilities. The irony is, many folks approaching retirement already have concerns about covering future bills. Yet even those with substantial financial assets may box themselves in with an inflexible wish list. According to a survey from Natixis Investment Managers, 35% of millionaires agreed with the statement, “It will take a miracle to achieve a secure retirement.” Would these millionaires worry less if they had discovered the power to adapt when necessary?
When making retirement projections, we tend to emphasize numbers. Software programs provide calculations which indicate the percentage likelihood that someone will or won’t run out of money. What’s not included in these software programs is the person’s emotional openness to adapting when needed.
Some people define a successful retirement within narrow parameters, while others can develop new possibilities even while cutting back. Rather than push their budgets to the brink, people can identify creative alternatives ahead of time. How might you enhance your flexibility quotient? Here are five steps to consider:
1. Don’t limit your options. Focus more on the feeling of excitement and less about a set way to satisfy it. Finding alternatives doesn’t mean you’re settling for less.
2. Explore the emotional attraction. Why are certain choices important to you? The appeal may have more to do with the friends or family who’ll be involved and less about the actual activity.
3. Consider your wish list’s financial ramifications. This can help determine the total cost and enable you to envision less expensive alternatives.
4. Develop a nonjudgmental mindset. There’s no shame in changing plans. You don’t need to justify modifications to your wish list to others. Avoid worrying about what other folks might think if you decide to shift gears.
5. Celebrate creative options. Life throws us curve balls in terms of wealth, health and relationships. Can we learn to focus on what’s really important to us and adapt as needed? Those who possess this skill will have an invaluable emotional resource.
Rand Spero is president of Street Smart Financial, a fee-only financial planning firm. He provides comprehensive financial services to help clients organize, increase and protect their assets through life transitions. Rand teaches personal finance and strategic planning classes at universities in the Boston area, and also hosts the podcast series Financial Crossroads. Check out his earlier articles.
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Good article. Frankly, it is hard for me to believe that so many millionaires are so pessimistic, unless as a group, they have an very expansive idea of what being “secure” demands (and don’t have expectations of any additional income that isn’t counted in their “million” (like Social Security). Be that as it may, it seems elementary that mid-course spending corrections are going to be a lot easier for a couple to make (and to live with) than a big downshift late in the game that leaves them gasping for enough breathing room to do anything. Of course, there will always be people who would rather just keep spending to build up their list of experiences, roll the dice about the future, and then hope for the best. So be it – it is their life.
Great points! Thanks for the interesting article.
Edmund, good point. Desiring to be part of an impressive story which takes others breath away can be a life long issue. The stress of having to pay for such a journey regardless of affordability should be considered.
I wonder if number four might be a factor in the couple’s wish list. People who spend their lives spending to impress others will probably continue to do so in retirement. The other items on the list reflect a more honest approach to buying happiness at every stage of life, and will probably bring more satisfaction.
Very interesting thoughts. Doesn’t the experience of this couple simply mirror life? Not necessarily unique to retirees. Many of us live each day spending on wants and often getting into debt in the process.
If this couple had been serious, their planning would have included savings designated just for travel in addition to income Investments.
What I don’t understand is why they needed a third party to explain their situation.