Which ‘C-Word’ describes your approach to retirement?

Compassion, Comfort, or Confidence?

If you have kids, and parents still alive, you’re aware of the need to make good choices your money earlier rather than later.

Retirement is a finite period of time to make sure your life is as awesome as it can be. With the pressures of raising a family and maintaining income security, it’s hard to break through and devote headspace to this topic, but the sooner you think about it, the better.

Are you too compassionate?

You may recognise that if property prices really do double every 10 years, your kids are going to have a tough time buying a home without your help. You may also realise money can go a long way to solving other people’s pain. If you’re compassionate, and if everyone did what you did, the world would indeed be a better place

There’s a problem with this mindset though..

Being compassionate towards the plight of others is the sign of a caring individual. It’s cruel then, that often the most compassionate among us, get left behind financially in their later years. Constantly prioritising others’ needs over your own is often well-intentioned, but it can lead to neglecting long-term consequences.

What about comfort?

If you could get to a place where money was sufficient, work was optional, and the kids sorted – you’d be happy right? You’re not asking for much, and you don’t live an extravagant life, so what’s the harm in pursuing a comfortable life? All you you want to enjoy yourself today without constant guilt. Seeking comfort often means making sacrifices so your loved ones, especially your children, don’t have to go without. Many parents will go to great lengths to ensure their kids don’t suffer, striving for comfort for everyone, including themselves. Here’s the challenge: By holding up the state of ‘comfort’ as the ultimate objective we can often neglect the things required in order to achieve it. Things like being…uncomfortable, and taking risk.

There’s a third way to approach retirement though: Confidence.

I always marvel at the plane safety briefs. The instructions are always to put the mask on yourself first, before putting the mask on your children. It runs counter to every instinct as a parent, but it’s logical. at 30,000 feet, Hypoxia can take hold in 30 seconds and render you unable to respond well in emergencies. Sort out your retirement first before tackling your kids’ problems.

Seeking the comfort of others ahead of your own, and being compassionate are admirable acts of sacrificial love. It’s also a terrible form of retirement planning.

Visualising our lives as a sort of a bell-curve helps here. The first part of our lives, financially at least, can be a struggle at the start, but it eventually gets easier. Maybe we manage to find a partner and procreate, or maybe we start something that we end up being proud of in our later years. The issue as parents, is that we forget where the bell curve goes next. Our financial capabilities peak right when our kids are becoming more independent. We reflect on the gap and desire to close it—after all, we’re compassionate, and we’ve likely tried to provide the most comfortable lives possible for our children so far. We don’t think far enough in advance, and assume that our strong financial position will persist.

Does this sound like a confident retirement strategy?

A confident retirement strategy demands planning. Much like how you’d build a home, you’d dream, plan, strategise, then triple-check your budget before you begin the work. We seldom approach retirement with a plan.

The financial parallel of you putting on the mask before that of your children is being as certain as you can be about what happens when you stop work.

Forgive me for being blunt, but until you’re confidently on track, consider making some tough calls:

Cancel the family holiday this year (although your friends are still going).

Maybe the kids do get a student loan (and pay board).

Perhaps they’ll be fine without an inheritance.

These are all the good things you should aim for also, but not until you’re sorted first. And how will you know when you’re sorted?

Because you’ll easily know the following:

– How much you need to be investing today.

– When you’re going to retire.

– What you’re able to spend.

Don’t underestimate how important it is that you succeed financially.

Living a comfortable life is the natural byproduct of doing everything else the best you can.

Aim for a confident retirement, regardless of your current circumstances and constraints. “Opportunity is a haughty goddess who wastes no time with those who are unprepared.” Want to know how to be lucky in retirement, be prepared for it now.

Need help with forming a retirement strategy? Let’s have a free 15-min chat to get started. 

*George S. Clason in “The Richest Man in Babylon”