The Adjustment Bureau
Financial planning - done right - is all about adjustments
Happy Wednesday!
I hope you enjoyed a nice Thanksgiving last week.
Emily Blunt and Matt Damon starred in the 2011 movie, The Adjustment Bureau.
I’ve seen this movie described as a “Mystery & thriller, Romance, Sci-fi” which is a lot to tackle in a 1 hour and 45 minute runtime.
The movie is based on a Philip K. Dick short story titled “The Adjustment Team.”
I haven’t read the short story, but I enjoyed the movie.
And if you ask me, “The Adjustment Bureau” or “The Adjustment Team” would make for a great financial planning firm name.
While financial planning begins with a plan - YOUR plan - the real benefit comes from making necessary adjustments over time.
Because life happens.
Change happens. It’s inevitable.
Surprises - both good and bad - happen.
I’ve touched on this idea before:
Financial planning is like using Google Maps or Waze.
Whether you’re driving across town or across the country, there will sometimes be traffic, road work, a wreck, or other situations that will either slow you down or require you to take a detour.
Your financial planning will be much the same.
What if you’re driving along and Waze tells you that you have an 82% level of confidence in reaching your destination safely and on time but doesn’t offer any alternate directions?
That’s not very helpful.
Sure, I guess 82% is better than 52% but what are you supposed to do with that information?
But having used Google Maps or Waze before, you already knew not to be surprised by a detour along your route.
And the likelihood of such a detour increases the longer your drive will be.
There’s more time and more variables that could change your course.
What if you’re in your 50s, 60s, or 70s and need to plan a quick grocery run this evening and you live 10 minutes from the nearest Kroger or Publix?
Well unless you’re loading up several shopping carts with food, most of you would likely go to your local store, get your groceries, pay for them, and go home.
But your local grocery run probably doesn’t require using Google Maps to get there, or call for creating a financial plan to cover the cost.
What about planning for the next 20 to 40+ years of your life?
I think you’re going to want to put some more thought into it…
20+ years is a long enough time period to expect not just one or two, but several detours along the way.
Several adjustments will need to be made.
And the types of adjustments can and will change over your life.
When you’re in your 20s, 30s, 40s, and even your 50s, you’re typically in a financial accumulation stage of life and focused more on saving for the future.
Your focus will likely be on your growing savings and investment balances over time.
In your late 50s, your 60s, or your 70s and beyond, most of you will begin to transition to more of a “decumulation” phase where you’ll need to make the shift from saving to spending.
This is often MUCH easier said than done.
Your focus in this phase of life will be on maintaining your lifestyle and how much can spend month-to-month. Or that should be your primary focus if you ask me.
Yes, your investment portfolio risk is and will remain a variable that you can adjust, but after you’ve transitioned from saving to spending, it’s primarily an exercise in maintaining your lifestyle through ongoing income.
From Social Security, from a pension (if you have one), from other sources of income, and from your portfolio.
And all along the way, you’ll be navigating things like:
Investment markets
Current events
Family circumstances
Health situations
Retirement
and much more…
You might remember the old Ron Popeil - Ronco Rotisserie Oven infomercials with his tagline of “Set it and forget it.”
I wouldn’t recommend that approach with your financial plan.
Unfortunately, many so-called advisors aren’t delivering real financial planning.
They’re creating an investment or insurance proposal dressed up to look like a financial plan. And odds are good their financial plan will rarely, if ever, be revisited.
I take a different approach and would encourage you to do the same.
Your financial plan should be the centerpiece - the central nervous system, if you will - of all your financial decisions.
And many of your lifestyle decisions too.
You shouldn’t just be open to the idea of financial adjustments in your future. You should absolutely expect them.
And here’s the secret… the more regularly you update, review, and adjust your plan as necessary, the smaller the inevitable adjustments will need to be.
Would you rather have to temporarily adjust your retirement spending down 3-5% or would you prefer to slash it by 20% or more?
Yes, that was rhetorical.
Financial planning and its accompanying adjustments should happen on a regular cadence. I believe at least 1-2 times per year is a good balance for most folks.
While you don’t want to micro manage your plan or your life, neither do you want to let it go unchecked for 2+ years at a time.
Smaller, more frequent adjustments are preferred to larger, sometimes painful adjustments.
I believe this provides for a nice rhythm to make the necessary financial adjustments to keep your personal finances and your life on track for a clear, confident, and comfortable financial future.
And please know, not all your financial planning adjustments will be negative…
There will likely be opportunities in the future to spend more, lower your investment risk, achieve your goals sooner, and more.
But you’ll only recognize and be able to act on these opportunities through regularly reviewing and adjusting your plan.
I don’t plan to change the name of my financial planning firm anytime soon, but if I did “The Adjustment Bureau” would be a good fit.
And now you know why…
Hit reply and let me know your thoughts on making financial adjustments along your life’s journey. Would love to know what you think…
Links & Things
For those of you that are interested, here are some updated financial numbers for 2024 including tax brackets, standard deductions, Medicare IRMAA premium surcharges, and more:
While many of us spend too much time glued to our mobile phones, here’s a glimpse of what might replace your phone in the future:
AiPin (be sure to click and watch the short video)
I enjoyed and would encourage you to read this Maria Popova article. It contains some real gems that will hopefully make you consider the difference between money and wealth. And there is a difference…
Thank You!
I’m glad you’re here. And I’m grateful to have you as a reader.
If you have any questions or an idea for a future email letter, blog post, or YouTube video, I'd love your input.
Or if you just want to say hi 👋
Simply hit reply - I read (and genuinely appreciate) each and every message you send.
Until next Wednesday,
Russ