In sticking with my letter theme from my last post.
We are taught so many common things in life.
We often get these “rules” locked into our brains over time.
These rules seem easy enough to follow and should make our life easier and better.
But are these rules correct for us at a specific point? Or even more interesting, are these rules even correct? Should we live our life actions by these rules we’ve learned?
Example Rule: “I before E except after C.” Weird Science!
English grammar is a confusing mess. Never mind trying to comprehend what a preposition or parable are? Identifying a metaphor vs an analogy. Or being a nonnative English speaker and understanding: There, Their, They’re or Where, Wear, Ware, We’re, Were, or Advise, Advice, Advisor, Adviser, Advicer.
Retirement Common “Rules”
Save for old age
4% “rule” – of what total amount? Deferred, Roth, brokerage, or even net worth vs usable amount?
Do Roth conversions. Pay taxes later. Pay taxes now when you can lock in low rates.
25X your expenses. Today’s 32-year-old you expenses, or today’s 43-year-old you expenses? What is the 67- or 83-year-old you need to spend?
Spend down your brokerage account first, then your deferred accounts, then your Roth account.
Spend on experiences, not things.
Which matters more: small things or big things?
There are so many rules. But are these just strategies? Are these just opinions? Do each of these “rules” setup a process that may work for you? Maybe they will; you are different, and they won’t work for you.
Case Studies
I know I may be alone on this island, but case studies don’t sit right with me.
I am amazed at the bravery, or extreme openness, of the people sharing their life in a wide-open environment.
They share their numbers, their life, their vision, their relationships, their concerns and fears.
In general, the idea of counseling freaks me out. I won’t get into that specifically, but I’m Gen X and from Alaska. I grew up with a figure-it-out-or-deal-with-it” mindset. I never received participation trophies. This is way outside my comfort zone.
Having recognized the bravery of each participant, subject, and focus, I think the audience (which is what they are) loves seeing what other people are doing; voyeurs. They love seeing where others are at—in comparison to themselves. This makes sense. We constantly live our own financial/savings life in a bubble with an opaque goal.
Comparisons
There is really no data out there for us to compare our FI selves to. There are very few validation-able reference sources.
To be clearer, there’s very little FI scoring. That’s harsh. FI levels, FI benchmarks, oh FI validations.
What if our FI bubble floats off course into some no man’s land or worse pops because we didn’t know to strengthen its shell.
Yes, I know, we can find common savings targets of “1X salary by 30…10X salary savings by 65.” These may work for normal retirees-for normal people who do not think about this financial optimization and long-term planning (from an earlier age). “I before E” type planning.
These common saving plans also tell workers leading up to retirement to plan to spend 80% of the pre-retirement savings. That may calculate correctly by subtracting employment tax, retirement savings, and work-related expenses, if that household spent all their income. “I before E”
What if that household spends more than their income, like so many well-earning households, and has debt, consumer debt?
What if this household wants to live some GoGo years and live it up? Is that going to cost the exact same as their working year lifestyle spend?
Advice? Advicers
I have been realizing that so much of the advice I hear (even out of my own mouth, or fingers-sorry) is from the advicers perspective. From the advicers experience.
YES, it is super important to get thoughts and ideas from those ahead of you. AHEAD of you. Ahead doesn’t have to only include years of life, but also time and experience in the area of concern.
I wrote about Advice vs Guidance. You know, I don’t know. I’m not sure what is best here. I do feel sometimes, ‘whoa?” at some points in case study advicers comments. But that is based on my positions on the same or similar items. I’m clearly not “correct,” I just “think.”
In case studies, there is often a large amount of “advice” flowing to the participant.
In case studies the advice is coming from a well-meaning person, but also from that person’s specific perspective.
I wonder if a case study response of “have you checked, thought about, looked into, etc” suggestions may give the participant pieces to take and grow more, rather than “you should, you could, even what if” responses.
I before E
The reason I brought up case studies here is that so often the standard rules of FI are suggested to the participant.
It seems that so often the audience member who speaks up is sharing their knowledge. Their knowledge may or may not be extensive or applicable to the participant’s exact case.
My Advice (I had to give advice…)
Always try and connect with someone you feel has similar thoughts, and maybe life structures and experiences that fit your life.
Maybe most importantly: use the rules or advice you hear as a Compass more than a GPS for your journey.
Don’t rely on 2nd-grade-grammar-type “rules” for your plan.
*** Nothing in this article is to be construed as financial advice. I am not a financial planner, nor do I pretend to be. You should always consult your own professional when seeking advice. This post is not a piece of literary mastery, just a random thought I had.