So now it is my responsibility, logistical and emotional goals.

Last weeks post centered around the idea of a "go to" source for information.  I looked at it from the point of view of the movie Idiocracy.  The main issue was the idea that characters in the movie were content due to the belief that a corporation (Brawndo) and it's products had all the answers.  In the movie plants were irrigated with Brawndo (basically a sports type drink) because it had electrolytes.  According to the Brawndo corporation plants crave electrolytes.  Characters in the movie had no understanding of how to grow crops.  This was especially true for the leaders of this futuristic society.  The President and his cabinet continued to try and grow crops by irrigating them with the sports drink Brawndo.  Crops continually failed.  In spite of continual failures leadership remained steadfast in their belief that Brawndo was the answer.  Why, because it had electrolytes and plants crave electrolytes.

This belief was rooted in the desire to alleviate the anxiety produced by not knowing.  In this specific case not knowing how to grow crops.  There is a comforting illusion that exists when we believe that someone knows what we lack.  This illusion is explained in the previous post.  However it was my conclusion that in this case the leaders were suffering from a delusion not an illusion.  In the movie this crop failure was solved by the main character who was a time traveler from the 20th century.  A time where irrigation with water was a well know technique for successful plant growth.  So then how do we deal with tough issues when the answer is unknown and there is no trusted source for the precise answer.  In short how do we become confident without being delusional.

One particular issue we all deal with is personal finances.  In our case (my wife and I) financial issues revolve around retirement.  The number one question is do we have enough to live on in retirement?  As it stands I am essentially retired.  I am not yet taking social security although I am old enough (just turned 63) to qualify for a reduced pension.  My wife is still working this provides for living expense and health care.  Out of her income we are still making contributions to a 401k and her employer is still matching.  We feel that we have been very fortunate in that we have both maintained relatively well paying careers.  Both our children (both are married with children) have been supporting themselves financially.  Our basic plan is for my wife to retire soon after turning 65.  At this point we will both be eligible for Medicare.  Neither of us have private pensions so savings and social security will be our only means of support in retirement.  The question remains do I have enough to retire?

Unlike the movie where the final thought is simply "you'll have to think about it and solve your own problems", we usually rely on some guidelines or best practices to begin to solve our problems.  These guidelines usually come from external sources..  These external sources could be subject professionals, books and on-line.  So how do we rate the effectiveness of any of these sources?  Just because someone says they are a financial advisor does not mean they know everything about your financial needs.  Books and on-line sources can provide some information but they are usually very generic and could be out of date.  One of the first things I look for is consistency.  If I get the same message from multiple sources I usually feel confident in incorporating it into my tactical plans.  As an example most sources tell you to estimate your retirement spending.  From this estimate you can begin to plan how much to save.

A second characteristic is context.  This is where our specific goals are brought to the forefront.  Specific to your needs at the time.  If you are a 25 year old could you estimate your retirement spending?  I have enough trouble estimating it and I am 63!  As a 20 something your major retirement goal would have nothing with your retirement spending.  Your major commitment would be putting a structure in place so that you have money consistently going into a retirement savings account.  This could take a few years and have several facets to it.  You may need to address current debt, current spending.  As a young adult you would also be saving for a home and expenses associated with a growing family.  As a young adult it may take 5 to 10 years to build a mechanism where savings are maximized and consistent.  While this is being built you would have very little time to think about your detailed retirement spending.  You need to have money before you decide how to spend it.

I have spoken with our financial advisor generally about retirement spending mostly because we are still generally focused on the savings side of retirement planning.  This leads to a very important idea in addressing big issues.  I believe that before the logistical goals and planning there should be thought put into emotional and spiritual goals.  These are the elements that are going to support every logistical decision you make.  Staying with the personal finance example, there are several ways to amass money.  One way is high risk, high reward.  There are some that relish this strategy.  Make a million, lose a million.  Make five million lose 4 million,  Make ten million lose 2 million.  Eventually you may be very wealthy.  You may also be broke.  It is definitely a lifestyle I could not survive.  What is the point of making several 100 million dollars if it kills you.  My wife and I have taken the approach of living below our means and saving.  This approach will never get us to the 100 million dollar club but will provide a nice nest egg to retire on.

We have known our financial advisor for quite some time.  We knew him long before he became our advisor and he was quite familiar with our family and our emotional needs and goals.  That is why we have continued to focus on the savings side of retirement planning in spite of our nearness to our golden years.  We will soon have to address the logistical elements of retirement.  We will need to address tax strategies, required minimum deposits and social security.  My wife and I will have to move on from general discussions about spending to more detailed plans.  Will there be debates on how to spend our money?  Of course there will be.  Will there be trade offs, no doubt.  All this can be done since our emotional and spiritual goals are reasonably well understood.

I does seem somewhat inconsistent that I began this post talking about how the characters in the move were delusional.  Now I argue that emotional and spiritual goals are important.  We usually associate delusion with emotion.  Emotion only leads to delusion when you advocate the responsibility of knowledge to another source.  Once you take responsibility for your decisions, emotional goals can be a strong ally.  Make sure your emotional and spiritual goals are discussed first.  They will be your foundation and they will guide your logistical goals.