Does Planning For The Worst Make Me A Pessimist?

Joy and her husband Andrew, both in their late 50's, were having a "friendly disagreement" in my office over the issue of long term care insurance. Joy had watched her grandmother go through a prolonged struggle with Alzheimers and felt they should pursue comprehensive long term care insurance policies. Andrew strongly disagreed - he argued they were both in great health and didn't want to "waste his money" on a policy they may never use. He kept asking Joy why she was assuming a worst case scenario. She finally looked up in exasperation and asked me, "Am I just a pessimist?" 

Is it pessimistic to plan for the worst? I'm an insatiable optimist, which can drive my wife crazy. I do tend to wake up in the morning assuming good things are coming and I've caught myself whistling as I walk around the house. But blind optimism - the naive hope that things will work out and I don't have to plan for difficult circumstances - has no place in a retirement plan. 

Many clients walk into my office with what I call "If/Then" financial plans. IF the market continues to do well, and IF I'm able to work as long as I'd like, and IF my health holds up, and IF my son gets the scholarship he's going after, and IF the government doesn't change the tax code, THEN my financial future will look just fine. IF/THEN planning doesn't work, and we know that from our own life experience! Life happens, right? Sometimes things go far better than we expect, sometimes everything falls apart. If my financial plan only succeeds if the pieces of my life work out the way I'm hoping then I'm setting myself up for pain in the future. 

A retirement plan has to work under a variety of scenarios. It has to be dynamic, it has to be able to pivot and still hold together when the unexpected happens. We talk about realities like death and long term care and recession not because we are pessimists, but because we want you to have a plan you feel confident in. Because having a good plan helps you face the unknown...with optimism.

If you catch yourself creating IF/THEN financial plans, we'd love to sit down with you and discuss a future you can feel confident in.