Journey Into Retirement

This is the fourth in a series of blog posts discussing what I have learned in business that can help you when planning a successful retirement.

LESSON #4: Do the analyses and the “What Ifs” so that you understand your options and the implications of various decisions and actions.

In 1982, Tom Peters, a business guru wrote a book entitled “In Search of Excellence.” He laid out the factors that make some companies great. One of the tenets of that book was a phrase he coined, avoid “analysis paralysis.” The point he was trying to make is that you can over-analyze a problem and that this excessive focus on more and more analysis can keep you from making a decision or at least a timely decision.

While I can attest to the fact that you can over-analyze an issue, these days I often see managers erring in the opposite direction. Leaders often let ego take over and make gut-level decisions either counter to what the data is saying or totally devoid of any analysis. This, in my opinion, can be even more dangerous than over-analysis. Data and information is nothing more than a window into reality. And, I would warn you to ignore reality at your own peril. Do you want to leave your retirement outcomes totally to chance? Do you want to explain to your spouse how in your gut you thought you knew the answer, but were wrong? Do you really want to take the risk that your version of condo living in retirement will be a refrigerator crate over an urban heating grate.

The reason that I bring this up is that I can envision some people making an “analysis paralysis” statement about this blog. After all, I have done a lot of data analysis to answer the prime questions over the various posts. In addition, I have built a number of tools for your use that some will see as highly (if not overly) analytic. Isn’t this overkill? Can’t we all just agree that inflation could be a problem, stock market returns are volatile, and that you are saving what you can and just leave it at that? Well the answer is “we could.” However, without these analyses, how will you know what to do? How will you know how or even if you should course correct? What actions should you take proactively to guide you to a successful retirement?

OK, I am more analytic than most. My tendency is probably to over- vs. under-analyze a problem. However, when you assess the risks involved, is that not the more prudent course to take, particularly when you are talking retirement? In retirement planning, I don’t think that you can have too much information.

Here is the point that I want to make: The real power of the information and tools that I have provided on this blog is the ability to assess the potential outcomes of various decisions you might make. So, for example:

– What are the implications for you when you enter retirement of the savings decisions you have made along the way. This involves allocation of your portfolio and how much you are saving. Is there a compelling reason to change either of these? What will happen if you do (with a particular focus on savings)?

– What are the implications of physically relocating in retirement? Is it a better option from a financial perspective to move or to stay put?

– Given various spending rates and cost of living expectations, how should you adjust? Should you plan to spend less or can you spend more?

– Can you retire earlier or should you work longer than you had planned? This is a key question for many people these days and the answer is an important one.

– How important is it to work after retirement? Is this a choice or an imperative?

For those who have a sixth sense about these sorts of things, you won’t need a lot of analysis. For most of the rest of you, humor me and do the analysis. I don’t think you will regret it!