Don’t settle for a retirement plan

  • September 26, 2016

Originally published in the News Star and the Shreveport Times on Sunday, September 25, 2016.

Question: Like most people I’d like to retire some day. I work for myself. What kind of retirement plan should I be looking at?

Answer: The kind that works when the wheels fall off.

retirement planI often remind clients that just because something has a label on it does not mean it is the only (or even the best) tool to accomplish the goal.

For years food manufacturers have employed labels describing their foods as “natural,” “healthy” and “diet.” These are the same foods that come in a box and I suspect could survive a nuclear blast. The fresh produce section of the grocery store may not label their broccoli, apples and nuts as anything but broccoli, apples and nuts, but I’ll choose them every time (over processed food in a box) when I want something natural and fresh.

The label (or lack thereof) doesn’t tell the whole story.

Similarly, the financial services industry has gotten pretty good at telling us that if we ever want to retire, we should put our money into a retirement account. And if we want our children to go to college, we should put our money in a college education account.

In the case of retirement, these accounts are often referred to as “plans,” as in, “I’m putting money in a 401K retirement plan at work.” I’m not sure how we ever started using the word “plan” in respect to these accounts.

They are accounts into which individuals put money. They are not plans.

It’s the difference between a general having a stockpile of weapons (a good thing) and a battle plan (an indispensable thing if you want to win the battle). The stockpile represents his available resource to put to use in his battle plan.

A football coach has a roster of players. Some may be so-called “five star” players, while others may be much more average. These are his stockpile of weapons. But as fans re-learn every year, a star player does not a good season make. That takes a coach with a good game plan, who then executes that plan during the game.

And that football game analogy is helpful to remind us that things do not always go according to plan. So an experienced football coach takes inventory of his available resources (his players and their abilities) and designs a plan to give them the best chance of winning possible. Often a coach has the entire first half of the game scripted before the kick off ever takes place.

But what happens if the star quarterback breaks his leg on the very first play? Or the half-back is playing poorly? Or the opponent’s defense is being very effective at stopping his receivers from catching the ball?

A coach knows that something is always going to happen. A football coach’s game plan cannot be an idealized course of action in a vacuum. It must expect disruption, surprise, opposition and the need to improvise on the fly.

Should we expect any different in real life? Shouldn’t we expect that our “plan” for retirement or financial independence will be similarly disrupted, surprised and even opposed – and that we will have to make improvised changes based on yet-to-be determined circumstances?

That’s why I suggest we expand our idea of what a retirement “plan” is beyond that of a labeled account or even an anticipated course of action assuming everything goes right.

I believe a wise retirement plan starts with something I’ll call a sturdy retirement structure.

We’ll talk about that next week.

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Byron R. Moore, CFP® is Managing Director / Planning Group of Argent Advisors, Inc. Email him at bmoore@argentadvisors.com. Write to him at 500 East Reynolds Drive, Ruston, LA 71270 or call him at (318) 251-5858. The opinions of any single advisor do not necessarily reflect the opinions of Argent Advisors, Inc. No forecasts can be guaranteed. Argent Advisors, Inc. does not offer tax, insurance or legal advice. The information contained in this column should not be construed as a substitute for personalized investment, tax, insurance or legal advice.