Retirement: Math Problem vs. Human Problem
I came across this fantastic illustration by British retirement podcaster and financial planner Dan Haylett a couple of weeks ago. It perfectly captures a dynamic I’ve written about on this blog more than a few times. Namely, the misperception we all have that financial planning is a math problem; an equation to be solved having either a right or a wrong answer.
As a recovering math major, I love a good math problem and I need very little encouragement to get down into the weeds of a financial plan. However, experience and introspection have taught me the limits of a purely analytical approach. By far, the biggest influencers of the success of any investment or retirement plan are not the numbers but the humans behind them. We’re all subject to inherent biases and prone to emotional reasoning that can derail a plan. But, if we get in touch with the underlying motivations, we can create a plan that supports broadly defined well-being, not just account balances.
The reality is that most people don’t “fail” retirement because they ran out of money, but many do fall short because they fail to engage in the harder work of teasing out and wrestling with the deeper human problems. There may not be a neat solution on offer, and yours may differ from someone else’s.
This is what makes the work I do so interesting. It combines both the head and the heart, but let’s not forget that it’s the heart that so often steers the ship.
