NEW YORK, Sept. 19 — If you find retirement planning difficult, here’s a little secret: It’s difficult for everyone, even the world’s top experts in the field.
Take Kristin Benz, for example. As the longtime director of personal finance and retirement planning at investment research firm Morningstar, Benz knows just about everything there is to know about the subject.
But as her father’s cognitive abilities began to decline, she took over her parents’ financial responsibilities and faced hundreds of retirement-related challenges that can’t be fully understood without experiencing them.
“That’s the best situation for them: to have someone who is aligned with their interests and can help them resolve their case,” Bentz said. “But not everybody can do that. A lot of investors are really concerned about starting the process without some help.”
These lessons come in the form of a new book, How to Retire: 20 Lessons for a Happy, Successful, and Prosperous Retirement.
The book is based on in-depth interviews with 20 personal finance experts, including Ramit Sethi (“Give yourself permission to spend money on things that matter to you”) and Jean Chatzky (“What women should do differently”), and includes chapters from best-selling authors such as.
Benz breaks down her personal finance career into the following five key points:
Be prepared to accept different viewpoints
Unfortunately, even though Benz spoke to some of the world’s most respected experts, there is no single “right” answer when it comes to retirement.
“Annuities are a great example,” she said. “Some said they should be considered, while others were intimidated by their name.”
Age is another issue. Some people want to retire at 60, others want to work until 75 or 80. None of these goals is necessarily “right.” Everyone’s situation is different and retirement plans vary.
Don’t be afraid to be weird
Retirement can take a long time, 20 or even 30 years. Therefore, it is usually a bad idea to look at a major stage of life based on what others expect or what others have done in the past.
If what makes you happy seems weird to other people, that’s okay – it’s okay.
“Don’t act like your parents or neighbors,” Benz said. “Do this a little at a time, do that a little at a time. Don’t do it like your peers.”
Forget about optimization
Contrary to what you might think, retirement is not a mathematical equation. You won’t find happiness by adjusting some asset allocation here and reducing transaction costs there.
Those are all good things, but retirement involves as much emotional demands as financial ones — probably more than 50 percent, Benz said. For example: Maybe stock market volatility makes you extremely nervous.
“From an optimization perspective, having some cash in the portfolio means your overall return won’t be as high,” she said. “But even if it keeps you up at night, it’s still a good financial plan.”
Use
No one can predict their ideal retirement life. Living in Portugal or Costa Rica sounds like a good idea—even if you don’t like it. How do you know? Give it a try.
“I like the idea of trying a lot of things,” said Bentz, who rented a house in Florida with her husband for a month last winter to see if that arrangement would work for them in the future. She began to miss her friends and family in Chicago.
“Take up different hobbies. Try different volunteer activities. Visit different geographic locations. Ideally, try things out before you commit,” Bentz said.
Find your “subtle happiness”
Most people have a list of things they’ve always wanted to do in their lives, like visiting Machu Picchu in Peru or taking a cruise on a glacier in Alaska.
Retirement doesn’t have to mean something lavish (and expensive). After all, most of your retirement won’t be spent traveling long distances.
“When I think about life’s most memorable events, they’re usually about the independent ones,” Benz said. “Retirement can also be about everyday joys, like friends sitting around a table and sharing a meal.”
