Episode Summary

Today on Agile Finance Radio, we’re going to talk about two paths that I see in the technology profession regarding retirement planning. Listen in to see which one you are on and what you can do about it.

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Key Points

  • Learn how you might be overthinking retirement.
  • Discover the two things paths that are typically taken in retirement planning.
  • Uncover two things to watch out for that can affect your retirement planning process and how they could impact your retirement.


Learn more about a financial routine for success.

Read about six other things you might not be thinking of for your retirement.



Today on Agile Finance Radio, we’re going to talk about two paths that I see in the technology profession regarding retirement planning. Listen in to see which one you are on and what you can do about it.

Often we are so obsessed in our profession with delivering near perfection in our deliverables or the message we are trying to convey that we forget to step back and think about what we are trying to accomplish.

It can be the same with our personal goals as well. We lose sight of the big picture and can end up spending months trying to figure out the right formula or strategy that we think will move the needle. That leads me to the first path I see people take when planning for retirement.

Overthinking Retirement

One of the biggest obstacles is overthinking and over-engineering your retirement number. If you look at retirement as a math equation to be solved, then you’ll never be satisfied with your formula. It’s not all about the math.

Yes, the math is important, and you need to run some numbers to have an ideal number that will potentially work for your retirement. But the challenge is that retirement is complicated and has too many variables to figure out your precise algorithm and create the perfect scenario retirement.

That’s why I called my type of planning agile finance. You start with a plan, not math, which outlines your goals and what you want your retirement and lifestyle to look like. Once you have identified your goals, you can start figuring out how much that costs and how much money you need to live each month and year.

You can’t control what happens in the equity markets, like stocks and bonds, and you can’t control what happens in the real estate market either, so that’s why you can’t create a math equation that figures out everything you want it to when you’re planning for a 20 or 30-year retirement.

So let’s agree to start there and not try to find the perfect math equation. Then think about a plan that makes sense that looks at all the areas of your financial life, including your savings, investments, insurance, health, and all of the other factors that can contribute to your longevity. Then, review the plan a couple of times a year to see if you need to make adjustments.

Retirement Investment Choices

The next thing that we typically over-engineer is researching the investments we want in our portfolio. For some reason, engineers and folks in high tech geek out on finding that perfect allocation or finding that perfect stock so that we can hit a home run. I think that’s more common in men than women. Women typically will invest for the long term but usually too conservatively. Men are thinking about short term gain, which is how we are wired to survive.

The biggest issue is just the number of choices that you have. There are so many options to choose from that you can get into analysis paralysis looking for that perfect stock, the right mix of stocks and bonds, the right combination of ETFs, and the right amount of real estate.

This is where many get stuck and start overthinking and over-engineering. You can spend weeks and months trying to figure out what is best. The next thing you know, the market goes into a correction, and that perfect mix you found doesn’t look so good anymore. I hate to tell you this, but there is no perfect investment. There are pros and cons to all investments, and each has its own risk and reward.

How do you narrow down all of these thousands of individual stocks, bonds, and funds to choose from to come to the point that makes sense for you? First, remember to think about it not as a math problem, but in terms of your goals. We generally know what market returns have done over a long period, so you can use that as a basis of mixing different types of asset classes to get close to a rate of return that you need to support your lifestyle.

You can’t assume a ridiculous rate of return when market averages have been 8-10%, depending on the time you look at. Also, you shouldn’t place all of your money in one asset class, either because that adds additional risk to your portfolio.

Don’t overthink this. You could start by simply investing in a fund that mirrors the market like the S&P 500, Nasdaq, or a part of the bond curve. Once you get more education and comfortable investing, you can take more pieces of your portfolio and fine-tune them by investing in other areas.

Invest with the knowledge of your goals and understand that you will want to be able to sleep at night. If you invest all your money in Tesla, will you feel good about that? Probably not, and that will give you something else to stress about. The point is to get started and take action, then make adjustments along the way but keeping the big picture in mind based on where you are and how close you are to retirement.

Minimalist Retirement Planning

The other path I see is the opposite of over-engineering your retirement. It’s taking a minimalist or a disengaged approach to retirement planning. Usually, this happens because of what’s happening in your life. There are many competing priorities for your time, and you don’t take the time to focus on and give your finances attention.

You are doing well. You have a substantial income, minimal debt, maybe just your home, so there isn’t financial pressure. The other important things get priority, like your job, your family, and the events surrounding those areas of your life.

You are saving in your 401(k), but that may not be optimized because you were unsure what investments to select. You don’t really have a plan to retire except you know you should in your sixties, but you don’t have an idea of how much you need or what expenses you should expect in retirement. The biggest risk to your retirement is lifestyle creep.

This is what happens all the time. Most people are trying to do their best, live a good life, provide for their family, and when 50 hits, all of a sudden you think, oh my gosh, retirement is just around the corner, and you start wondering or worrying if you are going to be okay. Now it becomes a priority.

The path back is the same as the over-engineered person. Develop a financial plan focused on your goals that recognizes what you have, then forecast where you need to be and what you need to be investing for the next 10-15 years.

Many times during this exploration, people realize that they have dreams and goals that they didn’t think was possible, and they might be able to take early retirement to focus on those things that they’ve wanted to do.

Getting Sold Retirement

There’s a couple of other things that may add to your over-engineering or minimalist approach that I want to go over, so you have awareness.

Along with the sheer volume of choices you have from investments, there’s also the issue of product mix and a product being sold to you rather than a product that matches your goals.

Unfortunately, I’ve found out being in the finance industry for over four years that there are many advisers still product-based and not looking at your financial picture holistically and figuring out what makes sense for your situation.

Frequently I see this with insurance. A lot of times insurance is sold as a solution to multiple problems. I believe that the people selling these are not typically trying to do harm and believe in their product. I firmly believe insurance has a purpose for an individual or family’s life, but I don’t think it is an investment vehicle.

Insurance will not match market returns, and they’re full of all kinds of fees, restrictions, and disclaimers, and it’s just not something that I would consider a part of your investment portfolio.

With that said, it can be used to do some good things like a death benefit, or possibly for legacy planning if you want to leave money to a charity or your children. It all depends on the rest of your financial picture and is not a one size fits all.

So this becomes an easy target for someone to be sold a product because it has so many benefits. It’s easy to over-engineer and try to use insurance to solve all of your financial issues. To me, insurance is mostly about transferring risk, so be careful with that area of your finances and don’t overthink it. Talk to someone who’s not trying to sell you something to get a different opinion about the product and how that might help you reach your goals and the right solution.

Saving Is Easy, But How Will You Spend In Retirement

The one thing that I see is that over engineers or minimalists don’t obsess about is how are you going to spend your money after you decide to retire? Meaning what is your strategy for generating a paycheck after you retire?

To me, that is the part that people don’t spend enough time thinking about and preparing for because you’re going to have to provide for yourself for 20 or 30 years in retirement. How are you going to make that happen?

The accumulation phase is pretty easy, right? You put some money into your 401(k) or your Roth, and maybe you can put some additional money in an IRA or a taxable account or some into real estate. Getting an accumulation plan is easy if you spend a little time planning, and sometimes it’s exciting, especially if you like real estate or individual stocks.

As you approach retirement, you need to understand how you will generate income from your assets. You also need to be very clear and aware of what your expenses are.

You also should be market aware, and this is where having an agile mindset comes into play. You typically can’t take a firm stand and say I need to take out $10,000 a month no matter what. It’s essential to have guardrails, so if your portfolio drops to a certain level, you know you need to scale back on your expenses.

The first few years of your retirement are critical and can set the course for what will happen for the next 10 to 20 years. If we start retirement with two or three terrible years, that could set you back and affect how long your money will last. If you didn’t adjust your expenses or generate extra income, then you could be in for a surprise 15 to 20 years later, and you’re out of money, and you still need that income to support your lifestyle.

Be sure to think about your distribution phase of your life and not just save as much as you can without a goal in mind.

Final Thoughts

I hope that helps you think about the path you are on for retirement and maybe a few things you can do to help keep you moving forward and make some necessary adjustments.

If you need help putting an actionable financial plan in place, head on over to agile finance radio .com and select the work with me option. I’m taking on a few new clients and would be happy to have a 15-20 minute strategy call and see if it makes sense for us to work together.

That does it for this episode of Agile Finance Radio. Tune in next time as we discover more ways to win with money, gain at life, and ultimately retire with confidence.