How Fine is “Fine”?
“Reality charges compound interest on avoidance.”
This is a thought-provoking statement I came across recently. You can apply it to anything in life—health, relationships, finances, the list goes on. It’s all too common to shrug and say, “I’m fine,” when it comes to stressful situations in life. But realistically, how fine is “fine”?
Let’s dive into a scenario. You and your spouse are in your mid-50s and have been saving for retirement for the last 30+ years of working. Maybe you like the number you see when you check your statements or maybe you don’t. Either way, you may think “I’ll be fine” or “I’ll figure it out.” Here are some questions that “fine” doesn’t address:
- Can you retire at 63 or will you need to work until 70? Or can you retire at 60 and get three years back?
- What if one or both of you live into your 90s? Will the money run out before then, or can you afford to spend more each year?
- What if there are unforeseen curveballs life throws at you—health issues, long-term care, market declines, inflation spikes, premature death, etc.? Are you prepared to withstand them?
- Is the classic “60/40” stocks to bonds investment allocation that you are in optimal in perpetuity?
- What happens when you pass? Even death isn’t tax free. Does “I’m fine” help out the next generation?
Feel overwhelmed yet? I don’t blame you. These are the realities that can prove costly if ignored. Say you created a financial plan at 60 versus at 50. The cost is 10 of your top earning years you could have used to catch-up are behind you and now you might have to work until 70 instead of retiring at 63. You “lost” 7 years. On the flip side, maybe you make a plan at 50 and discover you can retire early—you “gained” years.
I could create a million scenarios like this, but I think you get the point. The bottom line? Replace “fine” with “let’s find out.” It’s the same as the lesson we received as kids: look both ways before you cross the street. Your future self will be thankful that you did.
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