Subtitle: How not to waste your time planning for retirement.

Often we are told to ask the question, “Will I have enough for retirement?” On the surface that certainly is a valid question. However, the younger a person is the more variables exist that make the equation too complicated to properly calculate. As a thirty-something year old male, I have come to realize that most of my wondering “will I have enough for retirement?” has been almost a complete waste of time. Here are some retirement planning variables I believe we cannot either know or control:

1. Social Security

Right now I chuckle to myself when I read the asterisked segment of my social security statement. Here is my translation. “Hi, Mr. Ford, US Government here. Just wanted to let you know that the dollar amounts we are writing on this paper mean absolutely nothing. In fact, we don’t anticipate having the necessary funds to pay you the stated amount. Have a lovely life. P.S. We are happy to continue receiving your social security payments.” In the future I suspect that giggle with turn into a scowl.

2. Rate of Return

Should you plan to get a 12% rate of return? Is 6% more accurate? Should you split the difference and go with 9%? Regardless of the estimate you use, there is a good chance you are going to be wrong. Sure, you might save a million dollars, but that still might not be enough. Your asset allocation will influence you rate of return, but you still cannot know what return you will get.

3. Inflation

How much will $1 be worth 30 years from today? Will a Big Mac cost $15 and a gallon of gasoline $25? I don’t know. Do you?

4. Retirement Age

The first financial advisor I met with at the age of 21 asked me when I wanted to retire. What an impossible question to answer. Now more than a decade later I don’t think I am any closer to answering that question. I’m not even sure if retirement is the goal of life. Will I have a job I love? Will I hate what I do? Will I be healthy? Will my wife be working?

5. Activity During Retirement

When (could we even say if) I retire I have no idea if I will be sitting at home reading the daily newspaper and playing croquet or putting on a suit jacket and heading back into the office for another day of work. If I work part time what I need for retirement will fluctuate greatly. At this point in my life those questions only result in an “I don’t know shrug

6. Our future income

We impact our future income by our conduct, character, and work ethic. However, I cannot predict today what I will be earning 20 years from now

7. The end of time

As a Christian I believe the things of this world will not last for infinity. Much like Jesus, I do not know the day or the hour, but from an earthly perspective at some point there will be a generation who will not even make it to retirement.

How Should You Plan For Retirement?

Be responsible with your retirement savings. Plan and predict. However, don’t worry or fret because who of us can add a single hour to our lives by worrying? Far too many people spend hours and hours trying to predict these things, but that is extremely difficult to do. Instead focus on the things you can control. What can you control? We’ll that’s the topic of our post next Monday.

Any other unknown variables you think should be included on this list?