{"id":1004,"date":"2019-12-20T05:17:45","date_gmt":"2019-12-20T05:17:45","guid":{"rendered":"https:\/\/evolvemyretirement.com\/blog\/?p=1004"},"modified":"2019-12-20T05:17:45","modified_gmt":"2019-12-20T05:17:45","slug":"retirement-planning-first-day-of-rest-of-life","status":"publish","type":"post","link":"https:\/\/evolvemyretirement.com\/blog\/retirement-planning-first-day-of-rest-of-life\/","title":{"rendered":"Retirement Planning: Today’s The First Day Of The Rest Of Your Life"},"content":{"rendered":"\n

Retirement planning involves making complex decisions in the face of continual uncertainty. We find it incredibly hard to admit we\u2019re on the wrong track and change direction. When we make a decision and things don\u2019t work out as planned we tend to make excuses. We tend to avoid questioning our previous decisions, especially if we\u2019ve invested time and effort arriving at them. So we look for ways to justify our original decisions. If we do recognise that things have gone wrong, we often get demoralised and give up trying.<\/p>\n\n\n\n

Objective retirement planning (or any type of planning for that matter) means not being discouraged by past mistakes or mishaps. It also means not blindly continuing as though nothing\u2019s changed. Say you\u2019ve just lost \u00a310,000 after a poor investment decision. It\u2019s human to want to recoup your losses as quickly as possible. But it\u2019s not objective. The objective approach is to invest according to market conditions today<\/em>. Today is the first day of the rest of your life.<\/p>\n\n\n\n

Confirmation Bias<\/h2>\n\n\n\n

Psychologists call the tendency to question our past decisions \u201cconfirmation bias<\/a>\u201d. We ignore compelling evidence that we need to revisit our earlier decisions. For example, suppose our retirement planning looks good on paper. Then suddenly we learn that economists have revised the long-term outlook for inflation; they forecast it to be much higher than we\u2019d planned for. What do we do? A human reaction is to consider that experts often get things wrong; the experts might change their outlook again soon; so let\u2019s ride it out and continue as normal. This approach might<\/em> pay off, but it may well lead to problems in the future.<\/p>\n\n\n\n

Ask an expert<\/h2>\n\n\n\n

Most of us don\u2019t have the time or the inclination to become experts in retirement planning. So some of us pay good money to financial advisers and planners to guide us. But experts are only human, and they\u2019re also prone to confirmation bias. So is consulting an expert a waste of money? Not if the expert is aware of their biases; many use sophisticated tools that enable them to question or validate their biases. The best financial planners have a good grasp of psychology; they treat the human element as just as important as number-crunching.<\/p>\n\n\n\n

Retirement planning online<\/h2>\n\n\n\n

Finding a good retirement planner is enormously valuable, and often worth paying for. Sometimes though, we want to explore ideas on our own without paying for the privilege. Attempting to cater for this, there are numerous websites with retirement planning calculators. Unlike humans, machines don\u2019t suffer from confirmation bias. But of course they can sometimes have biases that their creators have built in.<\/p>\n\n\n\n

The vast majority of online retirement planning calculators are simplistic, leading to misleading results. Some typical drawbacks include:<\/p>\n\n\n\n