Planning for retirement is like equating the actual act of retiring with finishing a round of golf. The first hole is a par 4, meaning you're supposed to make it from tee to green in 4 strokes, or hits to the ball- that's called par. Here's how I see it:
GOLF- 1st SHOT: I'm on the first tee. I'm virtually invincible- nothing can hurt me. I have the body of Arnold in the first Conan Movie (stop laughing... this is educational!) I stand up to the ball for the first time and hit it a zillion thousand couple of hundred yards, straight as an arrow and right down the middle- just as planned. I'm off to a great start.
RETIREMENT PLANNING: You’re 21 and invincible. You made it through college, got a job, and are on top of the world. You enrolled in the 401(k) plan as your ace Certified Financial Planner™ practitioner Neal taught you. This is easy- you're on your way to a successful, very rich retirement.
GOLF- 2ND SHOT: It's a par 4 so I know I should make it to the green in two shots, so my plan is to just hit it long and easily onto the green. So much for the plan. The good news is that I hit it- the bad news is that it skirts right toward a bunker. The good news is that I hit it hard enough to roll through the bunker but the bad news it rolls into the desert part of the course. The good news is that it bounces off a rock but the bad news is it settles in an untrimmed bush. I just wanted to hit it straight... what happened?
RETIREMENT PLANNING: You're 35. You started making regular contributions to your retirement plan like clockwork. Then it happened: you found your one true love. You bought an engagement ring, and got your first apartment. Bought your first car. Don't forget paying for your wedding. Who would know that so many things would pop up to derail you from keeping up on your retirement contributions? Reluctantly, you put them on hold "for now."
GOLF-3rd SHOT: I hack it out of the bush hoping to get it to the green. Unfortunately, due to the fact that it's in a bush, it grabs my club and although I advance the ball, it's not on the green. I'm now thinking making the par 4 in 4 strokes may be questionable.
RETIREMENT PLANNING: You're now 45. You never thought diapers could cost so much, let alone how many you would need. Cars don't last forever, so it seems like you'll be paying car payments in perpetuity. You're now yelling at everything and everybody because you realize you've not had a vacation in years. Nor did you think that that the new landscaping could cost so much. So you go to Home Depot, buy the shrubs, trees, dirt, mulch, fertilizer, shovels, and rakes and implements of destruction (remember Alice’s Restaurant?) plant it, water it with your sweat, and take the money saved and start up your 401(k) contributions again. You're at least now putting in as much as your employer matches- Yay... free money!
GOLF- 4TH SHOT: Since I missed the green, I have to chip up. I do so, and its 6 feet from the hole- making the par seems like The Magical Mystery Tour. I can envision sinking the putt, but the reality is it's unlikely. I'm a realist. The good news is I'm almost in the hole.
RETIREMENT PLANNING: You're now 55. You review your statements and realize you're behind what you figured you'd have at age 55. You really did the best you could with everything you had to work with. You had planned for retirement at age 65, but it now seems unlikely taking into the fact that a little thing like college planning got in the way. You're still paying a car payment. That Hawaii vacation was great... until the bills started coming in. Did I mention the new roof and furnace? Geez... this hole seems like forever- and now I'm 65. I thought I was on track. I bought a cool '34 coupe- it looks great in the garage. I can use it eventually when I retire- no time now.
GOLF-5TH SHOT: It's only 6 feet. It's a bogey, but I'll take it. I usually just step up to the ball and knock it in without much thought and with great confidence. Now I'm taking my time- I don't want to leave it short, but if I hit it too hard I'll blast it past and have to go for another shot. I think long and hard, concentrate and focus, and finally put the little white ball in the cup. Hurrah- the hole is over!!!
RETIREMENT PLANNING: You're now 70 or so. For the past 5 years, you diligently saved, saved and it's time to call it quits. You tell your boss Ta-Ta. You come home to celebrate... and wake up the next morning at 5:30 AM wondering if this decision was right. Of course it was- that's the reason you worked so hard all these years. You made it- welcome to retirement!
You now know why GOLF is a 4 letter word. Welcome to my world... see you on the tee!