The bottom line is financial headaches, real or imagined, for nearly all of us. Even if you don't have much skin in what happens on Wall Street, we are all affected by what happens worldwide. It is absolutely true that if one developed country sneezes, we all worry about catching a cold.
So, what does all this mean for the concept of planning for retirement financial security? If you are retired, close to leaving the workforce, or even just thinking about the time when you will be freer to live your dreams, what are you supposed to do when the Dow drops 1,000, you can't afford your dream home, or China, the world's second-largest economy, starts to slow down?
As regular readers know, I am a non-financial blogger. I still managed to retire at 52 by following a simple rule: spend less than I made. I have had a few financial advisers over the years. Generally speaking, they have been positives for me.
So, what is financial security, and how do you achieve it? I suggest there are three parts to the answer:
1. Knowledge. I don't mean understanding derivatives, swaps, or other esoteric financial tactics that helped launch the 2008 meltdown. Obviously, many professionals didn't understand what they were buying either. I mean knowledge about your goals, the actual state of your financial health, and the amount of risk and uncertainty you are willing to tolerate. Self-knowledge is key. Without it, your future is at the mercy of others.
2. Patience. This is a tough one in a culture that literally screams at us, "buy now and buy often." Saving for something and delayed gratification is not part of our collective mindset. An article in the paper last weekend recounted the trend of those under 35 giving up on saving for retirement. After two years of Covid, these folks have decided that planning for an unknown future is silly. Enjoy life while you can before another ...whatever...knocks us on our rears again.
Patience is a winning strategy in much of life, particularly in financial matters. The hare lives up to 10 years. The tortoise is closer to 150 years. There is a reason he eventually wins the race.
3. Attitude. This is the belief that you have successfully prepared for your retirement. Life may make that difficult, but without an attitude that the problems can be overcome or worked to your advantage, severe damage will have been done to your long-term success. This isn't just positive thinking. Instead, the proper attitude allows you to make appropriate decisions, execute your plan, and adjust your goals. I know that the losses my investment account is showing are only real if I liquidate now. My attitude is they are paper losses, I will not deviate from my plan.
Financial security does require some money. It does require being smart with your investments. It does require a certain level of resources, though that level is different for each of us. That is the reality.
But, I contend that the mental part of the equation is as important. With self-knowledge, patience, and the right attitude, your financial security is not just what is in the bank or the broker's, but what is in your mind.
And, unlike a stock market that runs more on emotion than logic, I find it quite comforting that the mental part of financial security is 100% under my control.
I find that quite satisfying.