Rivers and Oceans and Retirement

By Brad Thomason, CPA

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When you stop and think about it, isn’t all of personal finance really just an aspect of retirement planning?  Every dollar you earn, or don’t earn, or spend, your entire adult life, impacts how things go when you reach retirement.
 
We all start out on pretty similar tracks, if for no other reason than we are all supposed to go to school for the first couple of decades of our lives.  One ten-year old’s day looks pretty much like the day other ten-year olds are having. 
 
Then we split off and go in lots of different directions.  How a policeman spends his day is very different than the way an architect spends hers.  Veterinarians versus pastry chefs; teachers versus welders; bankers versus HR managers.  Lawyers versus anybody (everybody…).
 
But in the end, we all head back toward a similar destination.  Just like raindrops meandering back to where they came from in the first place, we all come back together, we all become more similar again, in retirement.
 
This is significant for a couple of reasons.  Warren Buffett has mentioned that he long ago got in the habit of looking at price tags as if they were ten times as much as the price listed.  He reasoned that he was about to use a dollar, which would someday be ten dollars, if he chose instead not to spend it.  Now, I don’t think you can go through life torturing yourself over “$50” fast food cheeseburgers.  But it makes a good point.  If you spend it today you can’t spend it tomorrow; nor will it have time to make any more dollars to keep itself company.  Is that thing you want today worth ten times what you are about to pay for it?  Because in the end, that may be what it costs you.
 
Realizing that it all fits together, and that today’s actions directly impact tomorrow’s resource base, is a good thing to think about if for no other reason than it’s true.  Knowing how your world works is important without any higher purpose, as a means unto itself.
 
It’s just that here you get both: the people who take time to think about this stuff are the ones who come to understand just how big a job we’re talking about.  Paying for what may end up being several decades of expenses, living just on your assets and not working anymore, is a pretty tall order.
 
Those who learn this early and keep it in mind as they travel through their career years have a much better chance of having the next period go the way they want it to.
 
I would not want to have to figure out how many different ways there are to drive from Jacksonville to Seattle.  It would be a big number, I’m sure.  But in the end, wouldn’t the governing factor be that we were headed to Seattle?  The particular route that’s chosen still ends up in the same basic spot.
 
Financially, assuming we live that long, we are all headed to retirement.  We don’t have to be pre-occupied with it every second of the journey.  But remembering that it’s what we’re doing is still a good idea.  Periodically stopping to check the route has obvious benefit.  The Maryland/Pennsylvania line may be a long way away from Jacksonville.  But if you’re about to cross it, it’s best to realize that turning left is likely a better next step than continuing straight.
 
Well, I think that mixes up the metaphors enough for one day.  So I’ll leave you with this.  That classic book about the habits of highly effective people suggests that you start with the end in mind.  Your end is retirement.  Which I know, because that’s the end for all of us.  You are working toward it whether you realize it or not, and whether you mean to or not.  So I thought I’d just point that out.