For Whom

The retirement simulation didn't work.

Nothing dramatic had announced itself. There was no obvious mistake in the numbers. The inputs were reasonable. The projections ran to the expected horizon.

But when we looked at what the portfolio would need to be at retirement and compared it with what the current savings rate was likely to produce, there was a gap.

Not a small one.

We were looking at the simulation when the answer came.

Oh, don't worry. The plug is the inheritance.

It was said almost casually. Not as a justification. More as a clarification, as though there were a missing line in the spreadsheet that had now been supplied.

The parents were alive. No number had been promised. There was no certainty about when the money would arrive, or exactly how much there would eventually be.

But in the financial picture, the inheritance was already there.

Already assigned a job.

It was going to fill the gap between what they were saving and what they expected to need.

That made the next set of questions fairly obvious.

What if the inheritance was smaller than expected?

What if it came later than the retirement date the plan was built around?

What if their own earning capacity changed before then?

What if health intervened?

What if a job ended and the next one did not come at the same level?

None of these were particularly exotic risks. They were simply the assumptions underneath the plan, once you stopped treating the inheritance as a certainty.

Then I asked the question that made the assumption impossible to leave unnamed.

So your plan is based on accurately estimating the demise of your parents in time for when you plan to retire?

They laughed.

Then they looked at each other.

Neither said anything.

For a few seconds, the room was quiet.

It was an uncomfortable question. It was also the question that needed to be asked.

They left saying they would look at what they could do. They would reduce their burn. They would find things they could cut and put more into savings.

That was not the end of the conversation.

We met again.

And again.

The difficulty was no longer identifying the gap. That part was clear.

The difficulty was deciding what to give up to close it.

What was discretionary to one was important to the other. Something that looked unnecessary to one of them mattered to the other. Each had things they did not want to let go of.

There was no disagreement about the arithmetic.

There was disagreement about the life the arithmetic required them to live.

Eventually they could not agree on what to cut.

And so they concluded:

You only live once.

I remember the sentence because it was not really a financial argument.

It was a statement about what the money was for.

The financial plan had one answer. Their lives had another.

That distinction has stayed with me.

A financial plan is often described as though its purpose is to find the right answer. How much should you save? How much can you spend? When can you retire?

In practice it is less precise than that.

A plan is built from what we know, what we assume, and what we think is likely to happen. Change any of those inputs and the answer changes.

That does not make the plan useless. Quite the opposite.

A plan gives you something you can see.

It can show you the consequences of the choices you are making today. It can expose a gap that is otherwise easy to ignore. It can show you which assumptions have quietly become important to the outcome. It can ask what happens if those assumptions turn out to be wrong.

It can even show you that the thing making the numbers work is the thing you control least.

But it cannot tell you what you are willing to give up.

That is where the spreadsheet stops.

I have always thought of financial planning in much the same way I think of a doctor's prescription.

The doctor makes a diagnosis based on the information available, recommends a course of action and explains what might happen if you follow it or don't.

The patient still decides.

The doctor cannot be emotionally attached to the prescription. It belongs to the patient, not the doctor.

Financial planning is not very different.

I can tell a client that the numbers suggest they are spending too much. I can show them what happens if they continue. I can point out that the inheritance they are relying on may arrive later, may be smaller, or may not arrive in the way they expect.

But I cannot decide what they should value more.

I cannot decide which expense matters more to one spouse than it does to the other.

I cannot decide whether the life they are living today is worth the risk of a less certain life tomorrow.

Those are not financial planning decisions in the narrow sense.

They are decisions about a life.

And sometimes a plan is useful precisely because it makes that choice harder to avoid.

Without the simulation, the inheritance was simply part of the future.

Once it appeared as the plug in the retirement plan, it became something else. It became an assumption that could be questioned.

They saw the gap.

They saw what filled it.

They saw what that depended on.

They tried to change it.

They could not agree on what they were willing to give up.

So they chose to continue.

That was their choice to make.

Perhaps that is one of the less appreciated things about financial planning.

The objective is not always to get people to do what the plan says.

Sometimes the value of the plan is simply that it allows people to see what their choices mean.

And once they can see it, they may still choose differently.

You only live once.

Diptes Basu writes about investing, behavior, and decision-making, drawing on twenty-five years in global financial markets.

This essay reflects the author's personal views and is intended for educational purposes only. It does not constitute investment or financial advice.