When you’re in the midst of your career, earning well and (hopefully) enjoying life to the full, it can be hard to imagine what your life may look like in the future, once you retire.
A large part of the role of a financial planner is to help you answer future-focused questions, such as: “How would you like to spend your time in retirement?” or “Where do you imagine you’ll want to live as you grow older?”
Trying to envision your dream retirement can leave you flummoxed.
So, when forced to give an answer, you’ll likely respond with vague imaginings, that might include: “Spend quality time with my grandchildren” or “Travel the world”.
While there’s absolutely nothing wrong with these answers, they lack enough specificity to create a financial plan fit for your future.
Flip the questions and take a fresh approach
To land on answers faster, flip the thinking and begin by answering what you don’t want.
This thinking isn’t new.
Indeed, Carl Jacobi – a brilliant 19th century German mathematic – is famed for extoling reverse thinking. And it was Jacobi who coined the phrase “Invert, always invert”.
Charlie Munger was also a fan of this philosophy: “It is not enough to think problems through forward. You must also think in reverse […] many problems can’t be solved forward.”
So, rather than asking how you’d like your retirement to look, flip it on its head and answer the reverse question: “What would make me miserable when I retire?”
Chances are, you’ll find it far quicker and easier to give a full, detailed response. This will then allow you to create a financial plan that actively works to avoid the outcome you least want, while helping you to attain the lifestyle you can’t quite yet imagine.
Common pitfalls financial planning can help you to avoid
There are a handful of financial regrets that get plenty of airtime: not saving enough, retiring too soon, and underestimating lifestyle costs.
Working with a financial planner can help you avoid all of these.
And yet there’s far more at stake.
4 key lifestyle mistakes that could ruin retirement (even with a strong financial plan)
1. Failing to capitalise on life while you’re fit and healthy
Once retired, the majority of people have around 15 years to make the most of a healthy and active lifestyle.
Don’t let these valuable years go to waste through lack of planning.
Whether you want to trek through a remote jungle, explore South America, parachute from a plane, or simply spend a full season skiing in your favourite resort – get out there, do all the long-haul travel, and have exciting adventures while you can.
2. Losing your sense of purpose
Following 40 or so years of building a successful career, beware of succumbing to a sense of loss once you step away from the structure of work.
To retain your sense of purpose, it’s important to find alternate outlets.
Whether you wish to give back to the community through volunteer work, learn a new skill, or find some kind of part-time work that fits in with other priorities, don’t linger and allow the days to feel empty of meaning.
3. Feeling lonely and isolated
With increased job mobility, you may find yourself living some distance from your children and grandchildren.
As an expat, this may be something you’ve become accustomed to, but when you retire, you may find that spending quality time with your family is a greater priority.
When you finish working, make time to reconnect or strengthen ties with your family and loved ones, while also taking the opportunity to rekindle any friendships that have suffered at the hands of your career.
4. Neglecting your health
In your 50s and 60s, it’s possible to look after your health and prevent potentially serious problems in the future.
Poor lifestyle choices, or waving sensible healthy choices aside, could reduce the quality of your entire retirement, no matter how well you’ve planned or how much money you’ve saved.
Read more: Life, health, and wealth: 3 critical spans to consider when creating your financial plan
Proper planning could help you to avoid all of these mistakes, and more besides.
3 steps to help you think backwards when planning for your retirement
In initial meetings we get to understand you, your concerns, and your hopes and dreams for your future.
Since reverse thinking helps you to imagine what you don’t want, when plotting your future, it can be useful to think of it as a “pre-mortem”.
Here’s how to conduct yours:
Step 1
Imagine you’re 80 years old, sitting alone with the weight of regret pushing you deep into your armchair. Then, ask: “What went wrong?”
Retaining the same vision, ask yourself: “What do I wish I’d done differently?”
Don’t dwell too long – go with your gut reaction and write down whatever comes to mind. No matter how obvious the answers may seem, get all your thoughts onto paper.
Step 2
Next, get specific. For example, take a version of “I wish I’d travelled more,” and zero in by asking “Where do I wish I’d been?” and “When would have been the best time to enjoy the experience?”
Alternatively, if you wished you’d been healthier, ask: “What would I have lifestyle changes would I have made and which habits would I have stopped or adopted instead?” And, more importantly, “What would have had the most significant positive effect?”
Step 3
Repeat the exercise all the way back to today. With each regret, identify what you need to do now to help prevent it.
If your biggest fear is falling out of touch with your family, focus on where you might live in retirement.
Concerned about losing your sense of purpose after a successful career? Think about interests and pursuits you could start now and develop once you retire.
Don’t expect to solve everything in a day. Simply spend time contemplating what matters most to you, so you can begin to incorporate those thoughts into your long-term plan.
30-minutes thinking time now could end up saving you a lifetime of regrets.
Ascenta Wealth provides lifestyle financial planning that puts you first, not just your money
While many financial advisers focus their attention on your money – how much to save, when to retire, how to invest – at Ascenta, we take a different approach.
While your wealth matters, our relationship is with you, not your money.
Planning a retirement designed to make you happy and fulfilled will take more than a spreadsheet. It requires, imagination and deep conversation.
Thinking about your retirement in reverse, through inversion thinking, provides a practical (and potentially easier) way to do this.
The questions and activities described here aren’t a one-time exercise.
Your concerns and priorities aren’t static, and are bound to change as retirement draws closer.
What feels important now may morph as you grow older. What you want today will likely look very different to what you might want in a decade from now.
Regular progress meetings and updates with your Ascenta financial planner mean you can rest assured that your financial plan will stay on course, even if conditions change.
To find out more about how we could help you to harness reverse thinking to avoid retirement regrets, please get in touch.
