I have often wondered why people, in general, seem unwilling to do any kind of actual financial planning for their later years. A short time ago I came across a cartoon by Randy Glasbergen that asked an important question I had not fully considered. It shows an everyday person seated with who I presume is their financial adviser. The caption reads, “Explain to me again why enjoying life when I retire is more important than enjoying life now.” It was funny and also revealed an important clue as to why people may avoid coming to grips with their later years.
As someone who works in the realm of financial planning and financial advisory, I’ve always found it frustrating trying to get people engaged in their own financial future. Who wouldn’t try to get their house in order to go where they want to go? According to Fidelity, 85 percent of Americans have no written financial plan for how to pay for their retirement. And yet the cartoon is pretty telling. Perhaps too telling. Maybe people avoid actual planning because they fear they will not be able to enjoy things now.
The average person hears that they should be doing this and that. That you shouldn’t be doing A, but you should be doing B. Asset allocation, savings budget, college planning, blah blah blah. Stop buying that yummy latte all the time. Seriously, maybe the issue is that people who provide financial planning are better at offering what works theoretically and yet pay scant attention to how people’s lives actually work. Or what they actually want.
The last thing I would want to do is to scold someone about what they should be doing. That builds trust and engagement like tornadoes build Kansas farmhouses. But I wonder if, in the pursuit of helping people, financial planners and the industry as a whole have somehow gotten it wrong. Or more probably wrong: Why do 85 percent of people forgo a simple yet valuable process? Maybe it’s that what financial planners and the financial services industry want for people isn’t quite what people want for themselves. If true, this is a lapse that must be recognized and adjusted for. Maybe there is a middle path available that allows for people to feel safer examining how their life, future, and money intersect.
I understand that people want to enjoy their lives now. Who wouldn’t? And let’s be frank, a lot of people are avoiding their basic responsibility to save for their own future. That is indisputable. But there is a sort of wisdom in living now, too. It would be great to have lots of money when we get old, but how would we enjoy it? Travel is a great example. How do you enjoy the Champs Elysees or the tulips in Holland when you are eyeballing that knee replacement? That African safari might be daunting as well. Even that jaunt to Florida for a month may become less enjoyable. It’s hard to make the case that you should always wait to be older to enjoy whatever thrift you may have achieved. It’s a helluva challenge to get people to balance these things. But balance it they must.
Which gets me back to financial planning. If you want to see what you can enjoy today and still have a clear idea of what you can expect in retirement, then you need a quantified and comprehensive financial plan. One of the principles that I hold dear is, “It’s your life, you get to make the decisions.” I have literally said, “I will not be telling you what to do. You can make your own decisions. But my feedback, both positive and negative, will be based on the reasonable facts and probabilities that your situation suggests.”
The only part that a good planner has to play is to tell the client the truth. If you have taken care of your business, then maybe you can start enjoying things a bit earlier, like soon, if you would like to. Or maybe you can do the things you want to do now, but you must reasonably pare back your aspirations for later in life. You might even be able to enjoy more things now and have a comfortable retirement. That retirement may not be quite what you thought it would be, but it may be more than enough.
John Kageleiry is a business writer and financial planner. Read more finance columns at veriumplanning.com. Have a question for “Finance 101”? Email it to email@example.com.