Making Better Decisions, When You Don't Have All The Facts

When it comes to planning for retirement, you’re probably in one of the following 3 categories.

-      You got this!

-      You’re almost there!

-      You better get started!

If you fall in the “You better get started!” category…you had better get a move on it!!! It’s time to make some changes or, at the very least, try to understand where you are in developing some strategies to 1) Protect your nest egg, 2) Create streams of income, and 3) Reduce income taxes.            

If you fall in the “You got this!” category, stay put. My guess is that you already have strategies in place and feel comfortable and optimistic about the future. The most prudent thing to do is to hold tight and let your plan work its magic! Congratulations! You should feel proud of where you are. Not many people attain this Zone of Comfort.

Those of you who are a little bit unsure…you live in the You’re almost there! category.

Nearly 78% of future retirees reside in this vast area for which there are any number of actions you can take to increase your probability of comfort in retirement.

For you, it may make sense to make some changes!

I know that’s easier said than done. For most, change is difficult to contemplate, even harder to enact. But, seriously, if you have a feeling deep down that you haven’t done enough – what do you do? Where do you start? And if introduced to new path forward, how can you be sure you’ll make the best decision?

I created the SECURiMENT? Retirement Success Method to help those in the You’re Almost There! category. Those of you retiring in the next 10 years who aren’t fully confident a comfortable retirement awaits.

If change is advisable, the secret sauce is having the ability to make smart decisions when you don’t have all the facts. (Incidentally, the book I’m reading right now. Thinking in Bets – Making Smarter Decisions When You Don’t Have All The Facts speaks to this dilemma.)

The author suggests bringing your future-self into the decision process so that you consider the future consequences of an in-the-moment decision. She says:

“We’re not perfectly rational when we ponder the past or the future and engage our deliberative mind, but we are more likely to make choices consistent with our long-term goals when we can get out of the moment and engage our future-selves.

She advises better decisions will be achieved by balancing the past with the future.

Much of this revolves around biases and history. As we take inventory of our experiences, we tend to pay an outsized amount of attention to the past, and much less consideration to how decisions may affect our long-term goals.

Reflecting on your experiences is useful, but not if it prevents you from lending any weight to how you might feel in the future.

Consider the past, just don’t let it rule the future.

Business Journalist Suzy Welch created a tool known 10 – 10 – 10. Consider:

-      How will you feel about your decision 10 minutes from now?

-      How will you feel about your decision 10 months from now?

-      How will you feel about your decision 10 years from now?

We could also ask the question another way.

How would I feel about this decision now, if I had made it 10 years ago?

To summarize: If you’re in the Almost There! Category, you may have to make a smart decision, without all the facts! It’s best not to let the past get in the way!

[Reader: This is part one of a 3-part series on how to make better financial decisions. In the next post, I’ll share an example of one decision faced by my clients at the beginning of our relationship]