Oops! A Surprising Factor Retirees Forget to Plan for

Your retirement plan probably has a gaping hole in it, one you may fail to spot even though it’s an obvious fact of life that impacts everyone. This issue can cause big problems, but luckily, it’s also fixable.

Woman with surprised look on face covering her mouth
(Image credit: Getty Images)

You’ve saved, budgeted, worked with a financial adviser, managed your taxes, optimized your Social Security benefits, and checked off all the other major planning boxes. It might feel like the only thing left to do in your retirement planning is to actually retire. But there’s one thing you probably forgot to account for in all your plans — and it’s something that has nothing to do with your finances at all.

That crucial variable that you might forget to plug into all your retirement planning calculations and projections is not overly complicated, but missing it cause all that careful planning you’ve done for decades to go out the window. What is this mysterious X factor? It’s change. Specifically, it’s the fact that you change.

As Harvard psychologist Dan Gilbert puts it, “Human beings are works in progress that mistakenly think they’re finished.” He goes further, saying, “The person you are right now is as transient, as fleeting and as temporary as all the people you’ve ever been. The one constant in our lives is change.”

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Gilbert explains that we fail, over and over again, to understand how much we change thanks to the “end of history” illusion. This is the false belief that we consistently have throughout life that the person we are in the present moment is the person we were meant to be; we’re finally done growing and learning and changing and we’ve arrived at who we truly are.

This is part of what makes this factor so difficult to account for when doing something like retirement planning; most people will believe that it’s true for other people, but not for them! You would do well, however, to realize that the person you are when you eventually get a retirement party will not be the exact same person who made that party possible throughout your working and saving years.

How Different Are You Now from the Person You Were 10 Years Ago?

Retirement planning is difficult because we might start saving in our 20s or 30s and seriously strategizing in our 40s and 50s — all for something that will happen in 10 or (many) more years into the future.

It’s hard enough to predict with any degree of accuracy what your career, your finances and your life will look like next year, let alone in another five. In fact, go ahead and think back to where you were five years ago. Would that person be shocked at what life looks like now?

Of course, the global pandemic that turned 2020 upside down was a curveball no one could have expected. But setting aside the current events we’re all dealing with, think about not just how life might look different today but how you may have changed.

What’s different about your interests or your hobbies? Has your devotion to them grown, or has your attention moved on to other pursuits? What about your goals: As you’ve achieved what once seemed impossible, how has your thinking about “what’s next” evolved? Even aspects of your personality can shift with time.

Change doesn’t need to be radical or dramatic; it can be slow and gradual. But it’s still a departure from what once was — and it’s something that you probably would not have predicted five or 10 years ago. (In fact, Gilbert explains that people of every age, from 18 to nearly 70, underestimate how much they’ll change in the future.) Change isn’t a bad thing, either. As you learn, grow, develop and experience more, change naturally flows as part of those processes.

The bottom line is that we can reasonably expect to change over time. The person we are right now in this moment is probably not going to be the same as the person we’ll be in 10, 20 or 30 years from now. And that’s OK ... but how do we handle something like financial or retirement planning if that’s true? How do we start planning a retirement for a person we don’t yet know: our future selves?

4 Keys to Plan a Good Retirement for Your Future Self

Retirement planning would be easier if there were some strategy you could use to determine what kind of person Future You is likely to be. Unfortunately, there are no Buzzfeed-type quizzes that you can take to find out your Retirement Personality (at least, not yet). There is no practical way to reliably predict what your life will look like decades from now, or what you will be like.

What we can do, however, is create a financial and retirement plan that allows for freedom and flexibility. That plan should also strike a balance between life today and life far into the future. The goal should be to design a financial strategy that gives you the means to pursue what you want both today and tomorrow.

How can you accomplish this? Start by following these fundamental guidelines:

No. 1: Strike a balance between today and tomorrow: In practical terms, this means finding the right savings rate that gives you a high probability of having enough money in the future without taking away opportunities and experiences that are important to you today. I generally recommend that my clients put 20% of their gross income toward long-term investments (like retirement accounts or a portfolio in a brokerage account they can leave invested for at least 10 years). I’ve found this guideline gives people a great chance of being able to fund future lifestyles, but still provides money left over to enjoy right now.

No. 2: Don’t assume everything will work out perfectly: Avoid developing a plan that requires everything to go exactly right in order to work. We can, and should, expect the unexpected, which is why we develop cash reserves, we make Plan B’s, and we prioritize goals in order so that we clearly understand what’s on the chopping block if we can’t do everything we want.

No. 3: Give “Future You” options: It’s a big red flag if your plan only works if you work until you’re over 70, or stay in the same house in the same town for the rest of your life — and you’re making that decision in your 30s or 40s. Making massive financial decisions or commitments that you have no choice but to keep for decades to come (in order to make room in your financial life for something you want now) feels a bit like robbing Peter to pay Paul. From your vantage point of today, it might seem like no big deal, but remember: Things change. Your financial plan should provide you with enough wiggle room to chart a new course if you realize you’re tracking the wrong way.

No. 4: Plan conservatively for the future: Overestimate your expenses, and underestimate how much money you’ll have coming in from various income streams. Run projections assuming you won’t receive Social Security income (or at least, a lower benefit than what retirees get today). If you end up with higher cash inflows and lower outflows, then you have a surplus that provides more freedom and flexibility to use your money for many purposes — whatever they may be in the future.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Eric Roberge, Certified Financial Planner (CFP) and Investment Adviser
Founder, Beyond Your Hammock

Eric Roberge, CFP®, is the founder of Beyond Your Hammock, a financial planning firm working in Boston, Massachusetts and virtually across the country. BYH specializes in helping professionals in their 30s and 40s use their money as a tool to enjoy life today while planning responsibly for tomorrow.

Eric has been named one of Investopedia's Top 100 most influential financial advisers since 2017 and is a member of Investment News' 40 Under 40 class of 2016 and Think Advisor's Luminaries class of 2021.