The Fundamental Problem With Retirement Planning

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I recently read “The Personal MBA” by Josh Kaufman. The book describes universal principles that can be applied to any business.

As a student of personal finance and retirement planning, I saw many parallels between business principles described in the book and principles of managing my own personal finances. I kept thinking of JD Roth’s maxim that you must be the CEO and CFO of your own life.

One principle in particular stood out to me as the fundamental challenge inherent to traditional retirement planning.


Kaufman describes the concept of slack as follows: “Slack is the amount of resources present in a stock (or pool of resources). For a system to operate efficiently, the slack should be just right: not too big, not too small. Slack is tricky: too much and you’re wasting money, too little and you face the risk of running out of stock.”

Retirement planning is traditionally thought of as a dichotomy. You have a career, during which you earn money to fund your life while saving for retirement. Retirement is defined as the point where you stop working and you start living off the savings you accumulated in your working years.

Throughout our lives, we essentially have two key resources we use interchangeably to improve the quality of our lives–time and money. This brings us to our fundamental problem, a lack of slack in these resources.

Tension During Your Working Years

I’m going to play with Kaufman’s words and say the opposite of slack is tension. This is actually a great word, because it is a word that most of us feel at times during our working years. It is often the driver behind the desire to retire.

No matter how good we are at managing our time, we are all limited to the same 24 hours in a day, seven days a week. We all need to perform basic functions to live that take a piece of our time. Sleep is the largest.

Then we have this giant albatross–a career that eats up 40, 50, maybe 60 or more hours each week. We often tie up even more time commuting to and from work and many of us have little to no control over when we work. There is never enough time to do the things we want to do.

Constant Choices

I want to be healthy. Do I prioritize the benefits of a good night’s sleep or do I get up early because I know I should exercise?

I value my family. After spending all week at work, do we prioritize spending Saturday night with our child or do we find a sitter and have a date night?

I know it is important to invest in my future. Should I spend my spare time working on my side hustle or building a social network of friends. And don’t forget the spouse and children and exercise and sleep!

And if I’m doing these things, when does the grass get cut, the laundry get done, and the bills get paid?

Yes, tension is a perfect word. I can literally feel the tension build in my chest as I write these sentences and think of constant stresses we face due to a lack of slack in our most precious resource. Time.

Retirement can free up a massive amount of time in our lives. We may still be busy in retirement, but we have more control over our time. We finally have some slack.

However, retirement is not some utopia. It has its own challenges.

Tension In Retirement

When you develop a high savings rate you create slack in your finances. It’s nice to live within your budget and hit or exceed your savings goals when you’re working. But, whether you save 31% or 34% of your income is not going to make or break you.

Relatively small fluctuations in your retirement spending can cause major problems. It literally could break you. You can start retirement with a plan to follow the 4% rule or draw down at a more conservative 3.25-3.5% as suggested by the research at Early Retirement Now.

Regardless, traditional retirement infers living within a set budget without a lot of wiggle room. Withdrawals of .5% or even .25% greater than anticipated can lead to drastically different financial outcomes over time.

What if you underestimated health care costs by thousands of dollars because ACA subsidies go away or you suddenly develop a chronic illness? How will you pay for this?

What if an amazing opportunity comes along, you develop a new interest, or take up an expensive new hobby in your newly found free time in retirement, but it wasn’t in your budget? How would this feel after living with a feeling of financial security, even abundance, during your working years?

What if markets don’t perform up to historical standards and your accounts are dwindling?

Yes, tension again feels like the right word. A lack of slack in your finances is a scary feeling. It keeps many pending retirees trapped in one more year syndrome, while causing anxiety for those who take the plunge.

So how do you add slack into the system on either side of the retirement decision?

Slack During the Working Years

I am not going to suggest that I figured out everything during my accumulation phase. I felt the constant tension of many demands on my time while working. Nor will I suggest a few months into my early retirement that I’ve got that all figured out.

However, I have put a lot of time, thought, and effort into planning my early retirement. I would like to share ideas that made my final working years more enjoyable and strategies that helped me find the courage to take the leap into early retirement.

This is not meant to serve as a manual telling you what to do. I view it as an opening to start a better conversation about retirement planning. Let’s start with five things that worked well for me while in my career.

1. Stop Being a Donkey

“Don’t Be a Donkey” is a mantra I repeat to myself often. It reminds me to focus on what is most important right now.

The saying is based on a donkey’s inability to conceptualize the future. It will therefore look back and forth between hay and water, unable to decide whether to eat or drink first. Instead of doing one and then the other, eventually it will drop over dead because of its indecision.

This is a common theme among people who try to do too many things at one time. They are unable to get traction. Sometimes we need to simply step back and focus on what is most important at that point in time.

We can focus on the most important things now, knowing we still have time for the other things later.

2. Budget Your Time

If you’re reading this blog, you most likely have some system for budgeting or tracking your money. It is obvious how important it is to have a system to track and analyze our spending. Why not track and analyze how we spend our time as well?

I sit down every Sunday, prioritize my tasks for the week, and put them on a schedule. I’ve found that what gets scheduled gets done.

We cannot change the number of hours in a day. However, we can be intentional with how we spend them, to allow ourselves to get more done with less stress.

3. Slow Down

It is easy to get caught up with racing to retire as fast as possible. My wife and I–OK mostly I–got too focused on retirement a few years ago. I wanted it so bad that I often wasn’t able to enjoy the moment and the amazing things already present in my life.

Thankfully, we realized the error in our ways. We decided that it made more sense to push back our retirement dates and enjoy our working years as much as possible. My wife decided to cut down to part time work and I negotiated away pay raises to increase my vacation time.

This trade off extended my time working a year or two, but the time was far more enjoyable. My wife found that she enjoys working part-time so much that she decided to continue on this same path.

4. Buy Back Time

Many early retirement blogs suggest you insource as many things as possible, lower expenses, and reduce the time to retirement. I understand the premise, but reject applying the principle in absolute terms.

When time is limited, it may be worth paying someone else to do the things that do not add value to your life. While you want to be cognizant where you spend your money, remember that money is only valuable if used as a tool to improve your life.

5. Unplug

Possibly the most valuable things that we did to get back our time and make our path to retirement more enjoyable were things that many people today would consider radical decisions. We cut our cable cord about four years ago and stopped watching almost all television. We also made a conscious decision to not embrace social media.

My wife had been suggesting for years that we get rid of cable to save money. Eventually, I reluctantly agreed. Surprisingly, the non-financial benefits have been far more valuable than any money saved. Getting the constant barrage of sports programming and cable news out of our home has made us happier, sparked new curiosity, and made me a more attentive husband and father.

I feel as strongly about social media. Most people are not aware of the efforts expended tying us to technology. Many become addicted. If you haven’t considered this, check out the book “Irresistibleby Adam Alter.

I have a personal Facebook account and maintain a Twitter account for this website. However, I look at them as necessary evils of our digital age and take great efforts to use these services rather than allowing them to use me.

Slack During Retirement

Retirement typically presents different challenges, with money being the limited resource. We therefore have adopted three strategies to combat this.

1. Redundancy

We have always saved about 50% of our income. We initially lived off of my wife’s salary and used my income to pay off debt. Then we started putting my income towards paying off our home quickly and investing.

This was my wife’s idea. She loved the feeling of security of having two completely separate and independent income streams, either of which could support us.

I came around to the idea because I loved the freedom and flexibility it gave us. If an opportunity to have an amazing experience arose, we were in position to take advantage of it. Likewise, if an unexpected bump in the road happened, we were able to handle it comfortably because we had slack in our financial system.

We committed to building redundancy into our retirement plan, rather than simply accepting the traditional model of saving to an arbitrary number, be it 25x expenses and assuming a 4% withdrawal rate or 33x assuming 3%.

Some people would say this is overly conservative. In our case, it allows us to sleep well and actually gave me confidence to retire sooner than I otherwise would have.

2. Allow Work in Retirement

I frequently use the term redefine retirement. My definition is consistent with Darrow’s definition of early retirement. I can open the door to many opportunities and possibilities by allowing for work on things I am passionate about.

If I was unwilling to work on things that excite me, interest me, and allow me to grow as a person in retirement, I would not have had the courage to leave a career that I was burnt out on.

Knowing I can pick and choose work I enjoy that will earn some income, without being tied to a job because I need the salary or health insurance, allowed for both the personal freedom and feeling of abundance I desired much sooner. My wife and I can then work toward developing our sustainable redundant income streams at a relaxed pace.

3. Use guardrails

Guardrails are a concept used in mountaineering and backcountry travel. Navigating with guardrails can be contrasted against going for a hike on a clearly defined trail.

You will likely get exactly where you planned to go by hiking on a trail. However, by doing so, you minimize the adventure, and your destinations will be limited to the locations that the trail takes you.

Using guardrails allows you to travel on unmarked terrain. For example, you can study a map and see a river on your left and a ridgeline on your right between your starting point and your destination. You can then begin travel towards your destination. As long as you do not cross the river or the ridge, you know roughly where you are, and you are never completely lost. If you do hit or approach these guardrails, you know that it is time to adjust course.

We are applying this concept to our finances in retirement. Rather than committing ourselves to a fixed rate of withdrawal on our portfolio and living with a tight budget, we set guardrails around our spending. We will review and recalibrate annually. This gives us tremendous freedom.

A fixed budget is unappealing over a long period of time. It causes retirees to live with static spending while navigating a dynamic life.

Guardrails help give us the freedom to live a dynamic lifestyle. We can adjust our earning and spending to meet our needs and adapt to external conditions outside our control.

Create Your Own Slack

We’ve devoted a lot of time to making our working years as enjoyable as possible, addressing our fears of taking the leap to early retirement, and navigating retirement with minimal stress and a feeling of abundance. These are strategies that we’ve determined the best ways to meet our needs.

How are you tackling this fundamental problem of planning for retirement? Let’s discuss it in the comments below.

[Contributing Editor Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris' writing has been featured in MarketWatch, Doughroller, Business Insider and RockStar Finance. He is also the primary author of the forthcoming book Choose FI: Your Blueprint to Financial Independence. You can reach him at]

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  1. “My wife and I can then work toward developing our sustainable redundant income streams at a relaxed pace.”

    So far in my semi-retirement this is the #1 benefit I’ve found. Trying to develop those income streams from side-hustles while having a full time job seemed beyond daunting to me. And it also made the side hustle feel forced, with tons of anxiety and pressure.

    Now that I’m FI the side hustles seem way more relaxed. I still want them to grow and keep making more money of course, but it’s a much more relaxed and enjoyable process.

    Great post Chris!

    • Chris Mamula says

      Agree completely. I try to be fully transparent in what our lifestyle looks like. I generally use “retired” in my writing, as it is something that people have some sense of and I have retired as a physical therapist. However, I think our life looks a lot more like what Tim Ferriss describes in the 4 Hour Work Week than what most people picture as retired.

      My impression after my first read of the 4HWW was that it challenged me to think differently, but I found it mostly unrealistic. However, with a completely passive portfolio that should support us indefinitely, we have the freedom to work that way.

      We’ve found that it is pretty awesome to provide the best of both worlds, the time freedom of retirement and the financial abundance of working.

  2. I loved this post. “Slack” is a wonderful concept, one I am only embracing today because of recent rotator cuff surgery. (As a former PT, I am sure you know what that’s like.) The immobility, and the pain meds have caused me to slow way down. I now call it having slack, in time, at least. After reading your post, I will endeavor to maintain slack. I love Darrow’s blog – it’s my fav of all financial blogs – and I am enjoying your contributions. Thank you.

    • Chris Mamula says

      Thanks for the kind word CarolSue. I am way too familiar with rotator cuff rehab. Best wishes working through that. Be patient and love the idea of reframing the inconvenience as having some newfound slack with your time.

  3. Lest anyone unfamiliar with donkeys actually takes the above as gospel, please be assured donkeys can and do choose between hay and water. The don’t die of thirst or starvation because of indecisiveness or an inability to see the future. Indeed, only a jackass would pretend to know the full extent of another species’ abilities or thought processes. (Apologies to the noble jackass for the unflattering metaphor.)

    I found the guardrail concept helpful, though I will use it to contain draws against retirement funds rather than containing spending. Too little restraint on one side means running through funds earlier than planned. Too little restraint on the other side will be a penny-pinching retirement. Neither is ideal.

    • Chris Mamula says

      Sorry JCarol. I’m a city guy just passing along a metaphor I heard that worked for me.

      Agree that we really got hung up with the idea of living with a restricted budget after just comfortably living within our means and never formally budgeting during our working years.

  4. Frank Needham says

    I spend my IRA RMD on day-to-day and monthly expenses + income and property taxes + insurance (auto, LTC, health). I will spend from not-IRA for travel, emergencies. That fund is my “slack”.
    The hardest thing to adjust to in retirement was not saving. Essentially income = expenses.
    Like all, I don’t want to be in the last year of my life with only enought money for one year, so conservative investing and spending is essential.
    Greed and envy are your enemy.

    • Chris Mamula says

      Thanks for sharing Frank. I have elected a non-traditional retirement with plans to continue to have some ongoing income and am hoping to hear from people planning and/or living out a more traditional retirement.

  5. I believe there is a third key resource – it may not be interchangeable with Time and Money but it is necessary to a successful life.
    I have always maintained that people need three things to truly enjoy life: Time, Health and Wealth. Unfortunately:
    In your youth you have Time and (generally) Health. Most young folks are not wealthy.
    As you embark on building a career and starting a family, You find that you have your Health and at least some modicum of Wealth. But Time is essentially entirely devoted to work and family.
    Late in life when the family is grown, the career is successfully behind you, you find that you have have significant Wealth and lots of free Time, but often your Health has taken a hit.
    The goal in life is to somehow beat this trap. And that is why people want to retire early: To increase your free Time at an age when you have sufficient Wealth and have not yet lost your Health.

    • Chris Mamula says

      Great insights Shawn, and this was a big driver in my desire to retire early. I witnessed my cousin lose a battle with cancer about a month before my daughter was born and this combination of events made me really question what is important in life. I retired in December from being a physical therapist because I got burnt out on the day to day demands of the job, but I continue to have a passion in helping people live healthier lives. While this is primarily a personal finance/ retirement blog, health is a big piece of the equation and this will certainly be an area we explore further in the future.

  6. Excellent post Chris. My father used to tell me, ” You can always make another buck but you can not get one minute of your life back”. It was something that I thought about a lot. When I was 40, I decided to retire at 59-1/2. I beat my goal by 2-1/2 years. I was not trying to beat my goal, it just worked out. I was always careful to prioritize health and fitness and having a responsible good time. The things we liked, we spent real money on, such as travel. Well over a quarter million dollars. We had nice cars. On the other hand we have not had television in many years. We do not waste time on social media. I have a 2005 Motorola razr flip phone. We rarely go out to eat. We always considered ourselves “thoughtful spenders”.There are so many things that suck up everyone’s time and money that did not even exist 20 years ago. People need to step back and decide what is important, rather than charge ahead in today’s hectic world.
    Darrow used good judgement as always when he decided have you contribute to this site.

    • Chris Mamula says


      Thanks for the kind words and taking the time to share your insights. My wife and I were fortunate to get on the path to early retirement earlier than you and so were able to achieve financial independence at an earlier age, but our stories and philosophies are remarkable similar. We also have never been shy to spend on travel, and while we never were car people have spent on other things that we value that others probably think are crazy (namely sporting good equipment and event tickets). I couldn’t agree with your sentiments any more.

  7. I really like the flexibility that’s inherent in this post. I like things such as the 4% Rule when a person is starting to think about retirement and what they’ll need to aim for. But as you get closer, there’s a lot more complexity than a simple ‘Rule’ would have you believe. Concepts like the guard-rails are really useful in allowing some free will and the ability to move and change with the times.

    • Chris Mamula says

      I agree that flexibility is greatly overlooked in most retirement planning. I like the idea from ERN (cited in the post) of a 4% rule of thumb. 4% is a great starting point for planning, but is certainly not gospel. Even ERN’s proposal that we should have a lower rate of about 3.25-3.5 given current valuations and longer horizons for early retirees still feels restrictive to me. I like having some freedom on the earning and spending sides of the equation. However, it does mean that we have accepted some work in retirement so it is certainly a tradeoff that some either are unwilling or unable to make, and that should be acknowledged.

      • Thanks for the mention and the compliment! Very much appreciated! Great post, agree with all! Supplemental income (blogging, freelance work, etc.) obviously helps. But that likely leaves a gap between consumption target and hustle income we’re still back to a Safe Withdrawal Rate exercise to supplement the income from portfolio withdrawals. Also, I wouldn’t want to work forever, so we still have to translate how much the side hustle for a few years into an adjustment to the SWR. Pretty complicated problems! 🙂

        • Chris Mamula says

          Thanks for reading and commenting. I’ve been working through your safe WD series and think it is fascinating and unique take on the subject.

          Agree that it is complicated. I think that being as young as my wife and I are (41 and 40) we feel that there is a lot of benefit, even beyond money, to continue to have some work and earned income. The cool thing about achieving FI in the way that we have is that we’ve developed skills that will allow us to make a decent amount of money with little work, and because we also focused on lowering expenses, we don’t need to make a lot of income to cover all or nearly all of our spending. By working much less, we can earn the money in a much more tax efficient way as well. This means that even without saving more, by not spending down our portfolio or having a very low WD rate (1-2%), our investments should grow substantially or we can skim earnings to diversify into a few rental real estate properties and achieve our redundancy in that way which makes withdrawal rate a moot point b/c we would need to draw so little when we are ready for a more traditional (no work) retirement.

          At least that is our plan. Guess we’ll see. 😉

  8. While it shouldn’t be true, “Ego” comes into play, but it’s rarely discussed. I hit the magic 30x savings number, and left the C-Suite life for an early retirement. Of course I loved the freedom, but at social events I found it hard to answer the question “so what do you do?” So much “social status” is associated with our jobs. Saying I retired early and now volunteer my time on things I’m passionate about (family, community, causes, etc) gets a funny look…I even got one person asking “if the real reason was I got fired.” Nope. I wonder how many others thought that, but never asked me directly? 🙂

    • Chris Mamula says


      I agree that this is a real issue. This is especially true in the medical community where people have high sunk costs (time and $) in their education and much of their identity is tied up in their title (Dr.). Even for me as a physical therapist, this was an issue. I think this is a big reason to think about retiring to something rather than retiring from your job, and it is a good reason to think about having some type of work in retirement which also gives the “slack” with finances in retirement as described above.

  9. Very nice article. I also agree with Shawn’s insight related to health. As the saying goes – ‘Health is Wealth’, we take the former granted at the cost of time and money.

    • Chris Mamula says


      I couldn’t agree more and health is often sacrificed. Even for people that eat well and exercise, lack of sleep is worn as a badge of honor by many in our culture. This is quite frankly very ignorant, as sleep and rest in general are vital to long term health.

  10. Connor Davis says

    Very interested in more detail on how you apply the “guard rails” idea. Budgets don’t agree with me. As one who is about to retire, and who used a similar concept to build weath, some detail would be very much appreciated

    • Chris Mamula says

      Great question and one that we plan to discuss further in the future, but not to dodge the question I’ll give you a quick framework. We are gradually transitioning to a retired lifestyle. My wife quit full-time work 5 years ago and went to 30 hours/week after having our child. I worked full-time until last December and we saved 50+% of our household income, so living on any budget in retirement felt scary and restrictive. I don’t have any guaranteed income in 2018 (other than a couple of dollars for teaching a rock climbing class) but do anticipate making some money from blogging. My wife kept her 30 hour/week, flexible hour, location independent job that she likes and allows us affordable health insurance. For 2018, we plan on having a net savings rate of $0 for the year, ie living off of her salary and not spending any of our investments. For our lower guardrail, we are comfortable spending up to 3% of our assets. For our upper guardrail, we would be happy to add to our investments, maxing her 401(k) and two Roth IRA’s. That is a very wide range of approximately +/- $30k in either direction, which means essentially we can do whatever we want without a budget and still staying inside the guardrails. If we spent more than 3% of our portfolio value (unlikely and still very safe), we would be fine but would re-examine things. If we saved more than we could in tax advantaged accounts (also unlikely), we would have to question if we really are happy working that amount, or if we should cut back even more. Anything in between we would consider “on target” and wouldn’t change anything based on financial reasons. As we get more comfortable living without a high savings rate, we’ll probably tighten our guardrails a bit, but in the meantime we’ll also be adding to our investments (or at least allowing them time to grow) and we are considering diversifying into rental real estate, so we probably won’t have to tighten things up much as we’re building more abundant resources over time.

  11. Love the Tension and Slack analogy. There is a book in that as a concept, not just for retirement savings, but for living life.

    Thanks Chris. You’ve given us a lot to think about.

    • Chris Mamula says

      As noted in the intro it was applied in the book as a business principle, but the applications are wide ranging. Thanks for reading.

  12. Great blog and article. I retired (relatively early) at age 55. I developed a flexible spending plan for retirement similar to the guardrail concept (I like that term). I have three spending levels (worst case, best case, and probable) and monitor on a weekly/monthly basis to verify that I’m still within the guardrails (worst and best cases). I’ll readjust the spending plan every year in late December and have it ready for the new year. I use the bucket approach for allocating resources to be used to fund the spending plan: Bucket A (cash) is filled w/ assets equivalent to the next 2 years (2018-2019) of expenses, Bucket B (fixed income) is filled w/ assets equivalent to expenses expected during the years 2020-2027) and Bucket C (stocks) is filled w/ assets equivalent to expenses during the years 2028 and after. Bucket A is refilled from the proceeds of Buckets B and C as needed.

    • Chris Mamula says

      Thanks for reading and sharing Mark. It’s always great to see the philosophy and then granular actions of others so that we can learn from one another.