Ever made a decision you later second-guessed?
Shane Parrish’s book, Clear Thinking: Turning Ordinary Moments into Extraordinary Results, tackles this head-on.1
Clear thinking and decision-making are incredibly relevant for successful retirement planning.
While Clear Thinking had many great ideas, one in particular really stuck out.
Parrish suggests a two-session approach to decision-making, whether it’s for business or personal matters:
First, define the problem, and then, solve it.
Why?
In general, we’re taught how to solve problems, but rarely how to define them well. And a poorly defined problem often leads to poor decisions, no matter how clever the solution, according to Parrish.
Let’s apply this concept to retirement planning…
3 Retirement Planning Examples: Identifying the “Real” Problem
Here’s how separating the problem from solving it may look like:
Example #1
Let’s say you’re deciding whether to downsize your home or keep it as a base for the grandkids.
Instead of jumping to “What should I do?”—start by asking: What problem am I really trying to solve?
Is it cash flow? Simplicity? Travel flexibility? Family legacy?
Once the problem is clearly defined, you’re better equipped to make a thoughtful, regret-free decision.
Example #2
Let’s say you’re considering whether to buy a second home in another state.
Instead of jumping straight to “Can I afford this?” or “Is now the right time?”—start by asking: What problem am I really trying to solve?
Is it about escaping winter weather? Being closer to family? Creating new memories? Diversifying lifestyle assets?
By defining the why, you might uncover simpler alternatives or confirm it’s truly worth the tradeoffs. Clarity on your real goal helps you evaluate options more effectively.
Example #3
Let’s say you’re debating whether to help an adult child with a major expense, like a home down payment or launching a business.
Instead of going straight to “Should I give them the money or not?”—pause and ask: What problem am I really trying to solve?
Is it about providing opportunity? Keeping family close? Reducing future estate taxes? Easing your own guilt or anxiety?
Once you clarify your core motivation, it’s easier to assess if financial support is the right tool or if there’s a better way to support your goals and theirs. Separating emotional pressure from the actual problem leads to clarity.
Mental Time Travel
Another powerful insight from the book encourages us to slow down and consider the perspective of our future selves, a form of ‘mental time travel’ that can lead to better decisions.
To travel forward in time ask yourself:
“What would future me wish I had done?”
“How will this decision feel in 10 days, 10 months or 10 years?”
These questions help you avoid impulsive or rushed choices, a real risk when retirement brings a flood of new freedoms and decisions.
High Stakes vs Low Stakes
Parrish recommends spending more time on decision-making when the stakes are high, and less time where they’re low.
Said differently, when the cost of a mistake is high and irreversible, move slow. When the cost of a mistake is low and easily reversible, move fast.
Examples:
High Stakes “Irreversible” Decisions (e.g., when to take Social Security or whether to sell a business) deserve careful thought and deliberate planning.
Low Stakes “Reversible” Decisions (e.g., which airline credit card to use or whether to try a new budgeting app) are best handled quickly, saving time and mental energy.
[Related Resource]: Download our handy budgeting worksheet.
Retirement Decision-Making Checklist
Before making final retirement planning decisions, ask yourself these questions:
- What problem am I really trying to solve?
- What does success look like and what would I regret?
- What assumptions am I making?
- What could go wrong? Have I planned for it?
- Is there a way to split this decision into smaller, more manageable parts?
- Am I being reactive, or thinking clearly and long term?
- What would future me wish I had done?
- What are the hidden opportunity costs?
- If you say yes, what are you saying no to (and vice-versa)?
- And then what?
Diving Deeper: What Could Go Wrong?
If markets experience a prolonged downturn, a job loss occurs or family needs change, how is your financial plan impacted?
Parrish urges us to prepare for setbacks before they happen.
We couldn’t agree more!
In our world, that might mean:
- Estimating a spouse’s death impact on Social Security benefits.
- Keeping income sources diversified.
- Preparing for income disruption (e.g., disability).
- Running “what-if” simulations to stress test your plan.
- Setting aside a buffer for unexpected expenses.
- Updating insurance coverage regularly for adequate protection.
These kinds of safeguards allow you to spend confidently, knowing your retirement can weather a few storms.
Retirement planning and financial well-being thrive on clear thinking.
We recently wrote more about this mindset in our articles:
> How to Spend Confidently Without Regret in Retirement
> 3 Steps To Help Your Money Outlive—You (Describes the financial guardrails we use to stress test your retirement portfolio.)
As an aside, we spend a tremendous amount of time asking: What could go wrong, and have I planned for that?
This approach is key to managing uncertainty within your portfolio.
–David Bunker, Financial Advisor & Licensed Fiduciary
Before You Go
Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.
Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.
This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.
Source:
1: Amazon: Clear Thinking: Turning Ordinary Moments into Extraordinary Results, https://www.amazon.com/Clear-Thinking-Turning-Ordinary-Extraordinary/dp/0593086112