Roger Whitney, Contributor
Oct. 13, 2020
It’s easy to be overwhelmed by all the decisions you need to make when you’re preparing for retirement. So, let's talk about toothpaste. That's a more manageable topic than retirement, right?
Imagine you need to buy toothpaste. You're standing in the toothpaste aisle of your grocery store. Before you are dozens of toothpaste options. There's whitening toothpaste. There's gum-health toothpaste. There is toothpaste for sensitive teeth, strengthening enamel, or freshening breath. There are, in fact about 1,000 types of toothpaste!
Maybe we should stick to thinking about retirement.
But when it comes to retirement and toothpaste—and many other decisions we have to make each day in our life—we face so many choices we're hit with what's called decision fatigue . We get overwhelmed. The huge universe of options we have to think through drains our energy and willpower.
The result is it becomes harder for us to make other important decisions and make them well. We fall back to what we're used to doing, to what's easy, even if it's not the best for us. When it comes to retirement, we can get stuck on strategies that aren't working, or want someone else to just pick something for us. We might even put off thinking about it at all.
When it comes to complicated matters like intentionally planning the life you want in retirement, it’s important to step back and put the spotlight on decision making itself.
How Do We Actually Make Good Decisions?
At its core, a decision is a conclusion you reach after a process of consideration.
Usually, we evaluate the success of a decision based on the results. We think a favorable outcome means you made a good decision, while an unfavorable outcome means you made a bad one.
But what we want to focus on here is the process of decision making.
Whether we get the results we were hoping for or not, having a solid process means we've done our best to consider the factors in a logical way. It’s the process we should focus on.
Then, no matter the outcome, we can identify ways to continue improving our process. And that's the goal: Improve the quality of our decision-making process when it comes to retirement.
Break Big Decisions Into Smaller More Manageable Steps
The first step toward high-quality decisions is getting past the decision fatigue that can come with your retirement strategy. And yes, it does involve a lot of decisions.
- When am I going to retire?
- How will I create a paycheck?
- What will I do every day?
- Where do I want to live?
And each decision leads to others... What part of the world do I want to live in? What state, what city, what type of neighborhood, what type of home?
One way we can fight fatigue is to take all those decisions incrementally. We can break retirement decisions down into smaller, more manageable steps that we can take one at a time. And then we can pick out which decisions are the more important ones we need to focus on. Which will really make the most impact on my life?
Picking out a toothpaste, for example, might be one necessary part of your life. But if it isn't the most important step along the way, why spend much of your valuable energy on it? Grab one and move on.
The first step to better decision-making for retirement is to reduce your decision fatigue and break big decisions into smaller more manageable steps.
Keep in mind, it’s okay to be wrong when making decisions about your retirement. Or just about anything else.
If you stay flexible and open to adjusting your course, you can put ideal retirement within reach.
Pre-Make Decisions & Set Simple Rules In Advance
There are a lot of tangible ways to start practicing more efficient decision making, whether it relates to your finances or your day-to-day habits.
Here's one I brought up on the Retirement Answer Man podcast as a "Smart Sprint" goal for the next seven days: Pre-make one decision for yourself.
For example, you can choose your clothes the night before and lay them out, so you don't have to make that decision the next day. Come up with one decision—even if it's a small one—that you can get out of the way so it doesn't take up energy when it matters. Another way to streamline decision making is to find a way to cut down the sheer number of options. For example, when I evaluate investment options, for client accounts, I set a series of requirements that strategies had to meet (having a 10-year track record, lower-than-average fees, etc.), and if they didn't meet those rules, they were cut from consideration. These rules, refined with time and experience, made my decisions much more manageable.
What kind of simple rules can you set for your retirement planning decisions to help you streamline your decision-making process?
Build Your Framework For Making Good Retirement Decisions
My rules for evaluating investment strategies helped because I had an effective framework for making those decisions. And that's key to making sound retirement decisions without getting overwhelmed: building a solid framework for making sound incremental decisions.
We talk in more detail on the Retirement Answer Man show about developing your own decision-making framework, but it doesn't take much more than a few simple, self-reflective steps.
Once you have a strategy built around your goals and values, you can more easily and confidently make decisions that work best for you.
Picking a toothpaste can be hard. And so can making the right retirement choices. But with a focused, efficient decision-making process, you can make your most important choices in a way that leaves you feeling energized about your future, not fatigued.
By Roger Whitney, Contributor
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