Random Number Generators
By Brad Thomason
In the children's game, Candyland, as you may recall, there are no decisions to be made. You simply draw the card and do what it says.
In Checkers and Chess there are nothing but decisions. Obviously there are rules, so there's a limit on the decisions available (unless you try to play Chess with a precocious four-year old; in which case you will find out just how unbounded the possibilities actually can be). But other than your opponent's counter-moves, there's nothing unexpected to have to contend with.
Monopoly is a hybrid. You can decide to buy an available property, and whether or not to buy houses or hotels when you have a monopoly. But the dice dictate your movements, and the two decks of cards periodically inject variability which may be helpful or hurtful.
The dice in Monopoly and the various types of cards in both Monopoly and Candyland, mathematically speaking, are generators of random numbers. The games themselves are a sort of equation to be solved, but the presence of these elements lead to different outcomes: as if you were trying to add up four numbers in a series, but the value of the third one kept changing. You'd have to work the equation again; you'd get a different answer each time; and you'd never really know what was coming next.
Part of what makes retirement planning difficult in the first place is the presence of factors which are similar to dice and stacks of cards you're forced to draw from—and then comply with. This possibility of changeable data is also what creates the requirement for monitoring and adjusting throughout the retirement income period.
In other words, the basic reason why you can’t take the set-it-and-forget-it approach to retirement planning is because some of major settings won’t stay set.
Here is a non-comprehensive list of random number/event/force generators in the retirement planning equation, in the form of statements which begin with the phrase, You Don't Know...
How long you will live
How long your spouse will live
How much financial assistance members of your family will need
How much you’ll spend on healthcare
How much inflation will increase during your retirement years
How much your investments will earn
Why a non-comprehensive list? Don't you feel like that's already enough to make the point? Several times over?
My purpose in bringing all of this up is simply to reinforce things you've heard me say before.
First, it's helpful to have a sense of the sheer scope of what you're undertaking when doing your plan, so you don't get surprised and frustrated when you get into it and find it neither quick, nor easy.
Second, this perspective is one of the most compelling I know for demonstrating the need to monitor and adjust as you go.
We can't get rid of the random aspects of the question. Nor, by definition, can we know exactly what's coming down the pike. But we can know that the game is not just a matter of our own decisions, and plan our strategies accordingly.
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