Quick Hits…What I’m Reading

• From Strength to Strength: Finding Success, Happiness and Deep Purpose in the Second Half of Life – Arthur C. Brooks…‘From Success to Significance’ used to be my favorite book on aging well.  No longer…this is a great read for any-aged striver and now my favorite in the category.  Arthur Brooks has run think-tanks, written articles for large publications, and now has one of the most sought after classes in the Harvard Business School.  Recommended to me a few weeks ago by a client I respect, I am now passing it along to you.  Please read, but then let me know your take-away’s.

• Blisters, nausea, hallucinations: A hiker’s grueling attempt to cross Death Valley in four days – Los Angeles Times, Lila Seidman….a long form article, this details an epic journey of Cameron Hummels.  He set to traverse the entirety of Death Valley National Park…on foot…fully self-supported.  He endured sand storms, earth vents spewing toxic gas and chugged water laced with arsenic.  I am always drawn to the adventures exploring the outer boundaries of human potential.  This one is worth your time to read the whole thing, I promise.

• Greenlights – Matthew McConaughey…I haven’t read an autobiography lately.  This one is a bit more introspective and heavy at times on, well, just about everything.  Not my favorite by any means, but I always glean something from others life experiences and Mr. McConaughey is not short on life experiences. 

• Duke vs. North Carolina Is a Final Four Revenge Twist – The Wall Street Journal, Jason Gay – Of course, I had to include something on the Final Four.  Go Heels!

Beware of Your Shortcut

Are you familiar with the Rorschach Ink Blot Test?  It is the test where you see one image at first gaze, but if you stare longer or look from a different angle, you see a completely different image.  Psychologists have long used this test to examine one’s personality characteristics and emotional functioning.  Rest assured that I will not be testing you on that today; however, it illustrates something that I find fascinating.  Our brains can trick us.  Our brain uses shortcuts to spend as little energy as possible on easy tasks so that more energy can be expended on more important things.  In the case of the Rorschach test, it seems the short cut is to see one thing that stands out while there is another that hides in plain sight.  I go into the mechanics of how and why this happens below, but my broader goal is to bring awareness to this natural human tendency so that you might know when it is helpful and when it is not.

Mental shortcuts

There is never a lack of noise coming from the moving parts that make up your whole portfolio, especially whichever ones are squeaking the loudest at any given time. This is no surprise. The world is enormous. To cope with information overload, we engage in what behavioral psychologists refer to as heuristics. These are rules of thumb, or mental shortcuts, that take us past what seems inconsequential to our survival. They let us focus instead on the scariest snakes, and perhaps the lowest-hanging fruit we can find, both of which keep us alive.

Nobel Prize winner and economist Daniel Kahneman refers to this as System 1 vs. System 2 thinking in his best seller, ‘Thinking, Fast and Slow’.  System 1 is fast, intuitive, and emotional.  This is the thinking that happens without having to think.  It is incredibly adaptive and helpful to have a brain that can process information very quickly…think shortcuts.  But sometimes these shortcuts are not applied correctly in each context which then gets us in trouble.  That is where System 2 can help.  System 2 thinking is slower, more deliberate, and more logical.  Neither is good or bad; and both are extremely helpful, but we must understand the context in which a decision is made to know which system will be most helpful.

Better decision making

In many ways, heuristic thinking has worked wonders for us; it still does. But as decision makers, in today’s world, we can end up overreacting to the most exciting or alarming news and overlooking the less obvious evidence on how to create financial stamina.  This ‘shortcut thinking’ can be lazy at times and move us toward making short term decisions that hurt our long-term goals.  One of the best antidotes is to first become aware that your brain is using shortcut thinking and question whether it is in your best interest at that time.

Consider your quarterly reports or looking at your client portal to get a snapshot of your investments in this context. There is nothing wrong with reviewing these details, but I would encourage you to always be clear about the purpose.  Are you checking the details to review your long-term plan progress, or are you looking at how the values of holdings have changed over the last 3 months?  System 1 wants to you consider the short-term performance because it’s scary and there may be a snake hidden in there.  System 2 would have you stop and consider if the last 3 months have any impact on the long-term viability of your financial plan (hint: it has not).

Between exuberance and alarm likely lies wisdom

These comments may seem to be reacting to the headlines and stock markets since the beginning of the year, but the wisdom is applicable no matter the time or context.  There is no lack of snakes in the grass to focus our minds on when we scan today’s headlines. Will inflation rage through 2022? How far will interest rates climb? Will higher taxes happen? If so, how will they impact your financial, retirement, and estate transfer plans? What about coronavirus? Climate change? Russia and Ukraine?

When it comes to your financial plan, slow down, ask good questions, and let System 2 kick in.  That’s where we come in. We’re here to help you discover the expansive planning space found between the extremes of exuberant and alarming news with good questions and a disciplined approach to financial decision.

Retire on Purpose For the Best ROL (Return on Life)

Many new retirees feel lost without their jobs. But often what these strugglers are really missing is the sense of purpose that their careers gave them. Even if you didn’t love everything about your job, work gave your days structure and a sense of meaning as you put your skills to good use and provided for yourself and your family. That’s why our Life-Centered Planning process puts such a strong emphasis on preparing for the transition away from work and into a new phase of life where purpose itself can be redefined, and even deepened.

Answering these two questions could help you find that purpose and keep getting the best life possible with the money you have in retirement.

1. What is important to ME?

Under normal circumstances, new retirees often spend weeks, months, or even years taking stock of their lives and reassessing their priorities.

The pandemic, and now the war in Ukraine, have accelerated that process of reflection for many. When the future feels uncertain, we tend to cling to the things that we do feel sure about: our loved ones, our passions, the goals that we want to accomplish.

The good news is that those foundational elements of life are exactly what one can build their retirement around. Even if you decide to take a part-time job, you’ll have some flexibility to include the people and activities that make your life meaningful in your new retirement schedule.

For many, an ideal retirement week mixes smaller, everyday pleasures with progress on long-term goals. You might schedule a couple afternoon lunches or rounds of golf with retired friends around the online classes you’re taking to earn your Master’s. As you’re preparing for that big “bucket list” trip to Europe, you could make a few extra weekend trips to watch your grandkid play baseball.

There’s no right or wrong way to orient your retirement around the things that are most important to you, and in many cases the process involves some trial and error. Our ‘My Retirementality’ tool can help you gain clarity on what really matters. Then, we can filter those things into a draft of your Ideal Week in Retirement.

2. How can I use my resources to make a difference?

Three of the most valuable resources a retiree has are money, energy, and time. Many of our clients have told us that the older they get, the more value they assign to those last two.

Which isn’t to downplay the importance of money. You should be proud of all the hard work you put into building your nest egg. Now that you’re no longer focused on saving and investing, embrace the possibilities for fun, relaxation, connection, exploration, and purpose that your money provides.

But also think about the causes that could benefit from your generosity, the issues in your community that you could improve with a sustained charitable giving plan, the legacy you could leave by starting your own family foundation.

Then, think about how you can move beyond money. Your favorite local nonprofit might appreciate your gratis marketing or web security skills even more than your monthly support. If you especially enjoyed helping new workers find their feet during your career, you might become a tutor or mentor.

From Strength to Strength

Making strong connections between your resources and what’s most meaningful to you will be key to discovering your purpose in retirement. The process isn’t always easy, and it rarely follows a straight line. But it can be one of the most rewarding journeys you’ll take. We’re always available to help you plan for the next step and your ultimate destination.