When You Come to a Fork in the Road...
It seems that I’m not the only one who appreciates the wisdom of philosopher and Hall of Fame catcher Lawrence Peter Berra. Yogi was named "Wisest Fool of the Past 50 Years" by The Economist and I’m going to turn to him again for the title of an article. Once, when giving a friend directions, Yogi famously included the comment: "When you come to a fork in the road, take it”.
People have to make choices every day. Sometimes they’re small ones like where to eat lunch. Other times they’re larger ones like figuring out when to retire or determining if retirement is even possible. As planners, we’re often asked to help our clients with such decisions – well, only occasionally about where to eat lunch. But many people do come to us when contemplating retirement because they want assistance working their way through the complex decision matrix that accompanies such a significant life change.
Retirement decisions haven't always been so difficult. In previous generations, age, sometimes combined with years on the job, determined the timing. Many workers hated their jobs and longed to retire – often to a life of doing little or nothing. Perhaps that shouldn’t be surprising since their occupation was likely to have been hazardous, physically exhausting or mind numbingly boring. There were few options as far as adult education and communication was limited, combining to make a career change difficult. Compare that to the present. Today’s workforce tends to be more challengingly employed and has many more options. One person’s work life might encompass multiple careers and many of us find our jobs genuinely satisfying.
While this certainly sounds like progress, these same changes have made retirement decision-making more complicated. It’s our role to help organize and simplify the process, allowing our clients to make thoughtful decisions that serve their long term goals. For example, we might ask them to think about whether they should quit a fulfilling job just because a specific date arrives or, conversely, if it makes sense for them to continue working at an unsatisfying job simply out of momentum.
Decisions about ending a career are necessarily specific to each individual situation. Warren Ward Associates has had a lot of experience helping clients make them and we usually find that our familiarity with the topic is of value. Because we’re a step removed, our advice is likely to be less emotionally tinged, perhaps somewhat more reasoned, than those directly involved. Financial questions always arise but, so far at least, we’ve never encountered a situation in which we couldn’t make the numbers work out. More often, we find ourselves helping clients work through the wide range of options that today’s retirees face. For example, since this generation tends to live longer than their grandparents, the decision might be not be so much when to quit as what to do next. Having us involved in retirement planning can also serve as a counterbalance to the universal human tendency to put things off.
At the most basic level, financial planners are risk managers so we’re always on the lookout for ways in which a decision might go wrong. Could retiring too early compromise a client’s lifestyle if they live longer than average? Or, could working too long limit someone’s ability to enjoy life if a stroke or other debilitating event closes the door on travel or other pleasurable activities? Of course, specific outcomes can’t be predicted but we can help our clients make good choices after considering a wide range of possible scenarios.
I think our most important role is helping our clients integrate their financial decisions with the rest of their lives. This global approach is probably the single biggest way that our practice differs from those that simply provide investment advice. We believe that almost all life decisions, especially those involving money, are inter-related so we help clients work through them as a system: Is retirement possible – now or at what point in the future? If so, is life insurance still necessary? Should long term care insurance be purchased? What about the mortgage: should it be refinanced or paid off? The list goes on but once we reach its end, a client is equipped to move forward into a worry-free retirement knowing not only the when but also the why.
I’d like to close with a quote from a philosopher almost as famous as Yogi, A. A. Milne. The creator of Winnie the Pooh might have been discussing financial planning when he said: “Organizing is what you do before you do something, so that when you do it, it is not all mixed up.” A word to the wise . . .