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.

[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. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to Financial planning inquiries can be sent to]

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