Retirement Planning Concepts

When any of us faces a choice, there is a strong tendency to get caught in a well-recognized thinking trap. Namely, we laser in on the alternatives that come easily to mind, such as the ones directly in front of us, and immediately begin to weigh their pros and cons. In so doing, we ignore other aspects of the decision that may be important to us but aren’t immediately obvious.

This thinking trap is what decision scientist Ralph Keeney has labeled Alternative-Focused Thinking. We find alternative thinking very attractive, irresistible even, for two reasons: First, it happens naturally; second, it is what we learn as we go through life. Let me explain.

One of the behavioral challenges we face in making decisions is sometimes thinking too fast. Fast thinking is concrete and “now oriented,” so that when faced with choices it leads us to jump rapidly to evaluating alternatives directly in front of us or that come readily to mind. The second reason we find alternative thinking so compelling flows from what we learn as we go through life.

Making good decisions is a formidable challenge. The process is more complex than most skills we tackle in life because there are many psychological traps that can derail our thinking. And, despite its importance in many realms of our lives, very few people receive any formal instruction in how to make good decisions. It’s like that other vital activity in life that many of us face with absolutely no training: being a parent. If you are a parent, you know exactly what I mean. You are expected to learn as you go along and hope you don’t make too many dreadful mistakes on the way.

In the realm of decision making, what we learn as we go along is that making decisions is about choosing between alternatives (Keeney, 2004). Do I want to go to a movie tonight or do I want to eat out at a restaurant instead? Shall we take our vacation in the mountains or go to the beach? Which of two terrific job offers should I accept? The one in New York City with the attractive salary but not-so-great climate? Or the one in Los Angeles, which has a lower salary but where the weather is much better? Should I save for my retirement or buy that sports car and enjoy my money while I can? And so on.

Alternative thinking is therefore a very familiar process to each of us.

As a result, when you and your partner are poring over that dessert menu, your focus is “chocolate mousse, a selection of sorbets, apple pie, crème brûlée, hmm, what’ll it be?” You tend not to think, for instance, “How about skipping dessert completely, because we want to enjoy the health benefits of consuming fewer calories than we would otherwise. Or perhaps we should go to that great coffee shop across the street and finish our conversation there.” You don’t consider these other possibilities because you are focused on what is in front of you. You don’t realize that in focusing on the options that are immediately in front of you, you may unwittingly be excluding other relevant possibilities.

When you are planning the landscape of your retirement future, I am certain you will want it to fully reflect what you care about. And what you care about is likely to involve more than just one goal. The thinking tool for this first stage in planning for your retirement future therefore fully embraces the principle and process of value thinking.

I’m certain that when you plan for your retirement, you will want to be sure that the goals you come up with not only reflect your values but also cover everything that is important to you. I’m also certain that when you generate your list of goals for your retirement, as you just did using value thinking, you will be confident that you have covered all important bases. But, as you now know, almost certainly you will be wrong. You, too, will have thinking blind spots and need help in your decision making. It’s likely that I would need help, too.