Optimal Financial Plans Don’t Exist

In this clip with Dan Bortolotti, (‪@rationalreminder‬) we discuss why a ‘perfect’ financial plan doesn’t exist — life’s too unpredictable. The key? Create a good plan and adjust as you go.

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Wouldn’t it be nice if we knew how long people were going to live? It would make this whole planning process so much easier if I could say to people, I need you to die at 84 or 92 or whatever, then I could lay it out just perfectly.

Yep. People say like, “When should I start Canada Pension Plan?” I say, well, when are you planning to die? Right? I mean, because that’s the only way you know the op. Now, I’m being facetious, but the

No, that’s you’re not being facetious. You’re right. That’s the only way you really know the optimal decision.

Yes, so so that’s that and I always try to kind of resist the idea that a financial plan can be optimal I mean a financial plan can be excellent or it can be poor but it’s very hard to say with confidence that your plan is optimal because you need to know the future. Not only you need to know when you’re gonna pass away, which nobody knows but also just what might have to you happen to you in the future just with your health, you don’t have to pass away.

But what if you need to sell your home? What if you’re, I mean, for a younger person, I mean, something could happen in your career that could fundamentally change your situation. So, you know, we try to get away from this idea that there’s a set and forget optimal plan, because there isn’t. The idea is to actively plan every year and just keep revising it. You know, it’s that old cliche that the plan is worthless, but the process of planning is invaluable. And it’s true. You know, it’s not, it’s not a, it’s not something that you do once and then move on. You got to revisit it constantly.

It’s one of the reasons I really push people to spend so much less than they make. It’s not just to have the savings, but there’s a buffer. There’s a safety there. If things go wrong, and they so often do go wrong now, and with AI coming, let’s be honest, we can’t even guess the impact it’s going to have on the job market in certain sectors. And I think people have to be aware of those risks over the next 3 to 5 to 10 years and plan accordingly going forward.