Some people are optimists. Like the quote from Walt Disney, noted in the image accompanying this post, we look at life focusing upon the possibilities ahead that will produce better outcomes. On the other hand, some are pessimists. Some people seem to have more than their share of unfortunate situations befall them. Some are naturally pessimistic due to their melancholic personality type.

When difficulties arise, some of us display a bit of both extremes. We frustrate our loved ones by immediately seizing upon (and verbalizing) the worst possible outcome. We then abruptly swing into action, trying to arrange circumstances and details assuring the most optimistic outcome is the only one possible. I confess, this is how I often deal with issues, sometimes exasperating my spouse and co-workers.

As Disney wisely said, life is complex. We are not in control of the circumstances that befall us, our loved ones, friends, or coworkers. Because life is unpredictable and its events are controllable, it is wise for every person to have a “realistic” approach to life. This does not mean that pessimism is the equivalent of realism. It merely means that whenever we develop plans for the future, we should include options to be pursued when adverse circumstances arise.

Here are five alternate situations for which we should plan in retirement.

  • Plan for retiring earlier than you want. In the 31st annual report from the Employee Benefit Research Institute, it was reported that people consistently retire earlier than they planned. It is vitally important for us to include the possibility that we will not be able to work to 65, 70, or whatever age we may have targeted. Companies merge and jobs are eliminated. Health conditions for ourselves or our family may require us to retire. A business cycle interruption may cause our employer to close. While most people continue to plan to work to age 65, the median age of retirement is 62. Plan to retire earlier than you have thought possible…just in case it happens.
  • Do not plan on being paid in retirement. A significant percentage of the population make plans for supplementing retirement savings with income from employment. This is not a bad idea, but we also need to develop plan B. Again, our health may not allow us to work. If we are involved as a caretaker for an incapacitated spouse, or if we are providing childcare for grandchildren, gainful employment may not be possible. The recent pandemic dramatically altered the workplace, and millions of jobs were eliminated. While another pandemic may not be likely, an economic downturn will almost surely be a part of everyone’s retirement years. We should not depend on additional working income during retirement.
  • Plan for retirement to happen more suddenly than you wish. Many ministers plan to retire in the same way as we once down shifted a manual transmission. We plan to move into an associate ministry, then into a part time ministry, before fully “hanging it up.” Our emphasis here is more emotional and spiritual than economic. A significant number of people find meaning in their work role. This is as true for the preacher and missionary as it is for the corporate CEO or professional athlete. If our ability to work vanishes, or if the opportunity to work disappears, we will face significant challenges. How we feel about our ability to contribute to life can affect many relationships.
  • Plan for a lower Social Security payment than the statement shows. No one with the Christian Churches Pension Plan has ever been an alarmist about Social Security. We have avoided telling people that they should plan for the program to disappear. However, the probability of a lower payment than is mentioned on a statement has increased over the recent past. Most believe Congress will enact changes that will sustain the program. We think it is wise to include a lower payment as one possibility.
  • Plan for expenses to be higher than you think. For several decades, there were axioms repeated by many when discussing retirement planning. The first is, “You will need 80% of your working income in retirement.” The second, “You can withdraw 4% of your savings annually and not outlive your savings.” Depending on the size of your retirement savings, the second can provide room to breathe, or it can set off an alarm to plan on eliminating entertainment from retirement. While we may not have work travel demands and we may be able to reduce our wardrobe in retirement, we will still want to go places and we will occasionally want new things. Therefore, we believe it is prudent to develop a retirement plan that includes higher spending than you ever expected.

The moral of the story is this, when planning for your senior years, including a plan B may not be sufficient. Depending on the vicissitudes of life, you may find yourself on Plan E earlier than you ever dreamed.