Constructing a Successful Retirement

​By Brad Thomason
 
 
To truly understand a thing it is often helpful to look at it from various angles.  Analogies help us do this, and indulging in more than one analogy for a particular item is a productive and interesting way to end up with several lenses.
 
One analogy I like for the job of ending up with a successful retirement situation is the construction project.  Like the hammer and nails kind.  Building a bridge, building a house, whatever.
 
If construction is known for anything at all, it is known as being an activity which essential never goes as planned.  Virtually every construction project ends up taking longer, costing more, or both, than what people expected and hoped for at the outset.  This is widely known, widely studied within the industry, and apparently ubiquitous and fated.  No entity which I know of has ever found a way to completely defeat the problem.  I do not know if there are records which document delays and overruns during the building of China’s Great Wall or the pyramids of Egypt.  But I wouldn’t be even the least bit surprised to find out that they happened.
 
Sometimes you start digging the footings and find out the soil is so soft that it will take three times as much concrete as you originally budgeted.  Sometimes it pours a monsoon for three straight days when your site guys need to be digging.  Sometimes the materials you need are back ordered.  Sometimes they’re in stock, but the delivery guys have too many orders ahead of yours to get there today.  Sometimes, when you call for an inspection, the inspector is there the next day.  Sometimes it’s a week.  Sometimes he finds one minor item – one which will take ten minutes to fix – but it ends up being another two weeks before he can get back for a re-inspection.  Sometimes the electrician takes a day longer than expected, and as a result the plumbers can’t get in there on Wednesday to do their thing.  Neither can they just come on Thursday, due to other commitments.  So it ends up being Tuesday of next week.  Which throws off the framing inspection.  Which delays the insulation guys…
 
Sometimes an investment doesn’t earn the return we thought it would.  Sometimes we liquidate an asset, but there’s a lag until we reinvest the proceeds, so that capital sits idle and unproductive for a time.  Sometimes insurance premiums rise at a faster rate than we expected.  Sometimes employers reduce the amount of match they offer on 401(k) contributions.  Sometimes we spend more on a vacation or a car than we had originally planned.  Sometimes one of our babies has to get an unexpected Master’s degree.  Sometimes a family member develops a chronic medical condition, adding a new line item to the recurring budget.
 
See the similarities?  Lots of moving parts, doing their moving over a span of time, and in some respects predictably unpredictable.
 
Unfortunately for a lot of people that’s where the similarities end.  The default response to delays and extra expense on a construction project is that you just keep at it until the thing is finished.  A 90% complete house doesn’t do much for you.  So you stay at it until the original goal is complete, and sort of shrug your shoulders at the clock and the tab, because in the end the mission was to complete the build.  So you complete the build and count everything else as secondary.
 
Many people don’t do that in the retirement situation.  Instead of staying at it and continuing to build until what they have constructed is sufficient to the upcoming task, they stop mid-construction because they decided at some point in the past that they would stop at that particular time.
 
If you ask them whether or not they know that their savings have a job to do, they will say, “Of course.”  But if you then ask why they are basing the decision to stop building on the expiration of an arbitrary interval, rather than the completion of the project, they may not have much to say.
 
If you think about it, the idea of retiring at X age is sort of a hold-over from the days when most retirement plans were the old-school pension sort.  You retired when you reached a particular age because that’s when the pension payments were going to start.  But if your equation doesn’t have any pension payments in it (other than Social Security, which you have some latitude over when you start), then other than a personal preference or a convenient measurement, what does attained age really have to do with anything?
 
You would not send your builder away if the house wasn’t finished just because it’s the last day of the month and you had said at the beginning of the project you wanted to be finished by that date.  You’d stand out in front of your still-active construction site, one hand on a hip, the other perhaps holding an adult beverage, shake your head a little bit, and hope that another 30 days will be enough to finish.  And whether it was or it wasn’t, you would stay at it until the thing was truly complete.
 
Is there really a good reason to do anything else on the retirement front?