The best is yet to be – building flexibility into your financial plans
“Grow old along with me!
The best is yet to be.”
That start to a Robert Browning poem was quoted to me by a client the other day. It’s made me think a lot about general attitudes to the future – and the best way for us all to approach it.
My client’s email was about the words of advice she’d pass on to her younger self (you might remember I asked this question in last month’s newsletter).
“I’d say to my pre-retirement self ‘The best is yet to be’ can only happen if you plan for it now.
“You think you know how it’s going to be, but nothing can prepare you for the twists and turns of fate.”
Now, those twists and turns can be monumental, or they can be relatively minor. Your future might be sunning yourself by a swimming pool somewhere, or one that involves long-haul trips to visit family over the world.
In this client’s particular case, 11 years into retirement, she’d never imagined there would be grandchildren living thousands of miles away in New Zealand. And here she was arranging to deliver a NZ$99 Star Wars Lego toy from the other side of the world. But, she said, you must ‘expect the unexpected’.
So how do you plan for something you’ve got no way of imagining? And should you even try?
Straight-line planning doesn’t work
Carl Richards, Financial Planner and author of The Behaviour Gap has some very useful things to say about making plans.
He says: “instead of trying to carve the perfect plan in stone as if it’s a monument to the future, let’s write our plans in pencil and stay focused on the process of being a little less wrong tomorrow.”
Straight-line planning, drawing a line between your current reality and your ultimate goal, just doesn’t work. You can never 100% predict what is coming over the hill.
But his advice isn’t to abandon planning completely. Setting a path helps give us a direction to go in. Instead, we should strive for reality-based planning, accepting that it is an ongoing process and that, with your goals in mind, over time you will narrow the potential range of outcomes and prepare yourself for all those unpredictable twists and turns.
There is no magic certainty button
It’s easy enough to find estimates for how much your retirement might cost.
Some, like this handy infogram from Which?, even let you pick and choose, spelling out what it takes to have a comfortable – or even a luxurious – standard of retirement.
That’s a good jumping off point, but if you want it to relate to your personal retirement you need to make sure you give yourself options, to make it more meaningful to you.
When somebody sits down to talk to us, most of the time, what they want, above anything else, is reassurance.
- Will I be ok in retirement?
- Am I doing things correctly to avoid a large tax bill?
Our approach isn’t trying to predict the future, it’s about helping our clients become more resilient to whatever’s coming next.
Sometimes, it’s as simple as providing that extra piece of information that helps solve the puzzle and gives our clients more confidence in the decision they’re taking.
What we do is take their uncertainty and move it a bit further down the road. You can never have 100% certainty, but what we do know is that tomorrow we’ll be less wrong than if we hadn’t planned anything at all.
Keep your financial plans flexible and stay young at heart
Here’s what it comes down to: Be flexible.
Here’s a great example. One client whose husband sadly died recently, is considering moving house. But rather than settling down in the countryside somewhere – something her children are keen for her to do – she’s decided to rent somewhere different every year in the Mediterranean for six months.
This was never in her original plan, but she’s thought really carefully about what she really wants in life and has been prepared to ‘expect the unexpected’ and change tack.
But that’s the beauty of reality-based planning. It’s about giving yourself the flexibility to enjoy – not endure – your retirement and make sure that the best really is yet to be.