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Okay, my level of financial and retirement simplicity is not for everyone. I get it, people want details, they like to analyze, to plan and project the future. But tracking every penny spent? Hey, if that makes you happy and you feel better, go for it.
I try to cover all the bases too, I want to be prepared for the vicissitudes of life as FDR said about Social Security. For me that boils down to big picture stuff. Income streams, investments, survivor benefits and insurance of various types, including LTC, life and umbrella liability coverage.
My idea of retirement income replacement covers the big picture so I say what more do I need to deal with. Inflation perhaps? That’s what designated income focused investments are for. Do I know what inflation will be in the years ahead? Assuredly not, but nobody else does either.
Reading HD over the years, I wonder if some level of analysis and planning can be too much. More stress, perhaps inaction – analysis paralysis if you will.
Clearly we need to think about the future and try our best to plan, but there is just so much we can control regardless. Do we delay decisions until everything seems perfect and perhaps deny ourselves something we may enjoy?
I see several major questions:
What kind of lifestyle do I want in retirement?
Am I willing to compromise and how?
Do I foresee any major changes like relocation?
How much income can I reasonably expect to generate and from where, and how much provides a secure income stream?
Retirement can be a long time, with many unknowns and uncontrollable events. I say stick with the big picture and stop playing with the assumptions in your planning tool. It doesn’t know any more than you do.
“It’s not in the stars to hold our destiny but ourselves. “Better three hours too soon than a minute too late.” W. Shakespeare
I struggled through the accumulation phase with complexity vs simplicity. Complexity took the most effort and promised the most reward. Simplicity took the least effort but was usually suboptimal. I chose the middle path by adding some complexity, but not too much. Yes, I had spreadsheets to give me current status and future projections. However, I justified it by allowing me to view the big picture.
But, as I get deeper into retirement, it is painfully obvious, that optimization is no longer the goal. Although my interest has not waned, I must consider my wife and family when I am no longer around. Do I want to leave a complex financial web for my wife and my estate to figure out? How quickly will the current financial picture devolve if it doesn’t get constant attention with insider knowledge of its workings? For those reasons, simplify is my mantra now. Suboptimal, yes, but simply superior overall.
None at all, simple is KEY in my estimation. I am all in for the S&P and QQQ and cash to tide over the tough times. The older we get I think the simpler it should be.
I agree it is important to keep the big picture in mind. I like simplicity, personally. But as Einstein reputedly said “Make things as simple as possible, but more so”. And flexibility too. And, always reserve the right to tweak or modify the plan, when desirable, as you move through retirement.
If I’ve learned anything in my 64 years is that the best laid plans can be often succumb to the vicissitudes of life. I use to marvel at friends telling me of very specific plans they made, with the help of their financial advisors, for things 20-30 years out. I’m not talking about retirement or education costs for their kids, but things like second homes and such. I have experienced so many unexpected circumstances over the last 20 year alone, both good and bad, that would have made any specific plans untenable. Not knowing how much I’d need for retirement or college expenses, or life, my approach over the years was to simply DCA into IRAs to the max, always in stock mutual funds to maximize long term returns, DCA as much as possible into my 4 kids Coverdell ESAs and 529s, save even more money in stocks for other uses like paying off my home early, etc. I would say to myself that I need to save as much as reasonably possible, at the highest rate possible, for as long as possible. This simple strategy has worked for me in part because, let’s face it, the stock market has provided one hell of a tailwind since the early ’80s. That’s called luck. I’m now in a position where I’m considering some larger financial decisions and have some optionality. Throughout that journey had I planned much more specifically, I believe I would have experienced many disappointments resulting from unmet expectations or desires. My advice, over time, is to stack as many cards in your favor as possible and you’ll have the optionality to deal with many of life’s curveballs–because they are coming.