Retirement planning specialists are included in a wider group of people who supply this type of advice. The group includes economists, financial forecasters, “risk experts” and personal financial advisors which Nassim Taleb in his book The Black Swan, says tend to be - not experts.
We are often led to believe, or want to believe, that the experts that we consult really know what is best for us. However in many cases their models or assumptions or thinking is flawed. So when you use them in your retirement planning, learn to make your own decisions, or at least find out what questions to ask.
For example in many cases young people are regularly advised that they should invest in more risky portfolios because they have time on their side to recover from a disaster.
However if you start young, and depending on what you're trying to achieve, there may be no reason to ever have to invest in risky portfolios. Some accepted logic is confusing. "Wouldn't a risky portfolio be more appropriate when you are approaching retirement and do not have sufficient money?"
Retirement planning, like any planning, is not precise.
Think about the advice that you're given, understand the implications and get other opinions. Understand that all humans have a number of logic bias's. We look for instances that confirm our stories and our vision of the world. We find past instances that “prove” our theories and treat them as evidence.
Humans love the real, the visible the known, the visual. People struggle to understand abstract matters – we need context. So we listen to and make up stories distorted by our biases … and in the process lose the facts.
We tend towards sticky theories and don't change our minds very easily. The problem is that if you develop your opinion on the basis of weak evidence you will have difficulty interpreting information that you receive later that contradicts your initial opinion.
The expert fallacy
We think we are successful because we are skillful and believe that our failures are due to external events beyond our control.
All of these human characteristics are unfortunately also present in retirement planning specialists.
If we accept that we cannot predict the future. We must then keep reassessing our position in relation to the present. Just because we cannot predict the future doesn't mean that we must ignore it. We must accept that there will be events that take place that no one could ever predict. But we must then adapt to these changes.
There are certain things that we can take into consideration to try and reduce the risk. Lives are getting longer, a lot of the extra years are not that healthy, the official retirement age will continue getting pushed out. In future Governments are going to be less and less in a position to provide social security and medical benefits.
Retirement is a long term event and if you want freedom and security, do not just rely on retirement planning specialists. Learn how to use them as a resource in your retirement planning. Just remember who will have to live your retirement plan.