Motivating Retirement Action
In a recent piece from MarketWatch.com, Robert Powell outlines and discusses the Society of Actuaries’ seven steps to a sound retirement for middle income Americans. That there are seven steps is not a surprise. The number of actions anyone should consider when thinking about retirement may be three, five, or ten. It all depends on who is producing the report and on that entity’s way of thinking about retirement.
Always on the list is save more. This would seem obvious and generally it is. Another usual suspect is anticipate life style changes you’ll undergo in retirement and plan your savings around those.
There are others, and most of us know what they are. The Society of Actuaries’ list is as follows:
- Quantify assets and net worth
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Quantify risk coverage
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Quantify assets and net worth
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Compare expenditure needs against anticipated income
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Compare amounts needed in retirement against total assets
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Categorize assets
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Relate investments to investing capabilities and portfolio size
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Keep the plan current
All of these recommendations are sound and clearly make sense. We all should undertake these various assessments, but of course we don’t. That’s the problem. When it comes to thinking about retirement, most of us are too distracted by the moment we’re in; we can’t or won’t think that far ahead, even if that far ahead is just a few years. This inability has been discussed in RetireWell in the past: We tend to misunderstand the nature of decisions in general, financial decisions in particular. Thinking of large sums of money—as in, this is what we’ll need to have for a comfortable retirement—is as difficult as planning for something five years away, let alone twenty-five.
It may be true that we all live in the future, but it’s a short term future no doubt—what we’ll have for dinner tonight or what we’ll be up to this weekend, that sort of thing.
It’s true also that the impact of doing anything for retirement is more profoundly on the plus side the sooner we do it, and that means pretty much anything. Specifically it means our deferral levels; in the most general of terms, the longer we wait to begin saving for retirement means double and triple (and more) the amount we’ll have to save to make up later. Investment results also have a major impact on final results.
The result of numbers and studies is, essentially, do something and do it soon. And that’s fine. But we need prompting to do something. There are only so many ways to motivate actions (if indeed we can motivate them at all). But these have to do largely with two actions:
· Remind future retirees consistently that they must think about their post-work years
· Give them, now, something to act on without any—and that means, any—effort on their part
Providing a solution to the retirement puzzle (as Klein Decisions’ K4 Plan Goals does) is critical to prompting action. That’s the whole point—there’s very little action required. The work has been largely done.
There are many elements to consider when thinking about and planning for retirement; some are more important than others. But what is critical is getting individuals to act and making that action as easy and understandable as possible.
For more information see Klein Decisions’ Plan Goals.
Tags: k4 plan goals, klein decisions, making decisions, plan goals, retire well, retirement guidance, retirement planning, retirement strategies, successful retirement
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