The Post-Pandemic Retirement Survival Guide - Part 2

I’ve noticed that the pandemic has helped people ‘unpack’ their thoughts about money and finally realize that financial crises occur more often than initially told. It’s like getting smacked in the side of the head with reality.

So, how does one think full circle financial?

Break it down and look around. 

Don’t perceive every financial challenge as a straight edge with a beginning and conclusion. It leads to narrow thinking and sub-optimization at the point of action. Round out your thought process. Go where you have never been before. When presented with a financial decision, break down the walls, goals, compartments, and picture how all your dollars can flow free from their different types of accounts and work together to achieve the most significant impact on your bottom line.

For example, there’s massive structure In screenwriting, a formula based on horizontal thinking—a beginning, middle, and end. However, vertical thought, or where a writer breaks away from the procedure, is where great conflict, interest, ideas, actions deepen that captivate audiences. Why would the perception be different for retirement planning?

When performing an exercise on broader thinking with my fiscally responsible couple, we concluded that utilizing an existing home equity line of credit at less than 4% interest to pay off the credit card with a 21% interest rate was an optimum conclusion.  It was a significant improvement never considered because the mental barriers were thick between business and personal accounts. Once they removed the borders, a solution was obvious. 

Grab every opportunity to assess the opportunity (cost). 

I’ve gone overboard with this one. I take lessons seriously from influences like Dan Ariely and share them with anyone who will listen. I now examine the “full circle” of every money choice. I’m obsessed with dollar drag.

Before ordering at an iconic Texas barbecue place, I stepped back and thought of what else I could do with the money during a recent evening out.  Was this the “highest and best use” for my $28 bucks? I took away the walls and permitted the money to flow through other options, including eating at home.

I had to weigh the opportunity cost until I returned full circle to the current choice or stopped on a better solution. Better doesn’t always mean cheaper, either. When it comes to opportunity cost, you need to input much into the calculation, including what your time is worth and other qualitative factors.

If anything, this thought process can allow you to pause before making a purchase or setting a financial retirement goal that, in the long-term, is not that important and also create awareness about choices of greater satisfaction and value. Oh, and I went for the pork ribs and fixings (in case you were wondering).

Think rooftop, not basement.

When you bust down the walls between dollars, you begin to think larger (and wiser). You’re up on the roof looking out and over the landscape of your finances. You begin to see how fungible money is.

Most of the time, we rummage in the basement where it’s dark and narrow because of the laser focus on the problem.  Unfortunately, the longer we concentrate, the less we observe lucrative options hiding in plain sight. That’s why financial decisions should begin from a holistic perspective (roof) and then conclude in the basement or the specific issues at hand.

Hire a navigator.

The navigators exist. The best financial advisers are sensitive to their own emotional biases and can help others navigate through theirs. There’s a synergy and greater satisfaction when a financial partner can help reduce barriers and encourage breakthrough or “a-ha” moments. You always appreciate the highest and best use of a navigator. Your net worth should be affected positively, too.

Create retirement plan optimization.

Most people do not have a written retirement strategy. One that breaks down mental boundaries and takes into account a holistic view of finances. Those who have a formal, written plan tend to weigh opportunity costs or are, at the least, sensitive to the implications of their financial choices.  Since plans consider the entire financial picture, they direct investors to focus on the big picture. Eventually, emotional walls crumble, and one quickly thinks full circle and able to assess clearly how every decision can affect a retirement start date.

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Disclosure: Real Investment Advice is powered by RIA Advisors, an investment advisory firm located in Houston, Texas with more than $800 million under management. As a team of certified and ...

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