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A writer named Doug Carey had a post at Seeking Alpha called 3 Pitfalls To Avoid When Retirement Planning. He says don't wait to start saving, don't count on Social Security and make sure you beat inflation. Obviously all three are important but as I read through I stumbled across what I think could a huge dilemma.

In talking about starting early, he starts out with something like, let's say a 25 year old wants to retire at 65, and then he crunches some numbers showing the importance of starting early. He is right but there is a problem here that I have thought of often but could never figure out how to articulate (and maybe I still can't).

Think back to when you were 25. Could you have possibly had any understanding or what it meant to be 65? When I was 25, even 40 seemed to be so far into the future that it would never come (not that I wouldn't make it to 40, but more like it would never come for being so far off in the future). As I got close to 40 I realized that when I was in my 20s I had no concept of what 40 would feel like. At 45 now, from a self-awareness point of view I am quite certain that I don't really know what it will feel like to be 65, it is possible I don't understand 50.

If I am even articulating this in a way that makes any sense it creates a lot of unknowns in trying to plan for retirement. I think it is easy to understand at any age that you need to save money for the future and the more you save the better off you are likely to be. Someone who is 25 can understand this, I think, because as framed in this sentence there is no need to envision or guess what your life will be like in 40 years. "I know I will need money" is easier than "I will need $3400 month starting out and my health insurance will go up 10-15% per year."

I believe in crunching the numbers. At 40 or 50 you have some piece of money and you have whatever knowledge about yourself that you have accumulated and you need some sort of blueprint. So I guess the point is to have enough self-awareness to know that the 65 year old you might view things much differently than the 50 year old version of you.

To the extent this line of thinking resonates, the solution needs to be keeping as many options open as possible. How each person does this is where personal solutions come into play. I tend to think of options as including not needing every last nickel you make to pay for your lifestyle (as in live below your means) and having some sort of plan B in case the unexpected happens with your primary source of income. In trying to think about post-retirement - what about having a job that you love enough that you don't want to retire or putting in the time to create some sort of ideal job for yourself (monetized hobby) for when you do retire, such that it covers a decent chunk of what are hopefully modest expenses?

I believe I walk the walk in this regard in that while I can't envision a scenario where I want to do something besides manage money in the stock market, I realize that anything can happen and between the writing and a small income I could take from the Fire Department (we can be paid for certain patrolling and certain fires), it would cover our fixed expenses by a slim margin. As I have said before I am very motivated to avoid financial stress and having a small monthly nut is probably easier for most people than finding a job that pays a lot of money.

Everyone needs to figure these things out for themselves but everyone can benefit from keeping as many options available as possible.

Source: Keeping Retirement Options Open