Stan's World - Man Plans, God Laughs
There’s an old Yiddish expression that rings true far too often in life: “Man plans, and God laughs.” The obvious meaning is that we all try to plan how our lives should unfold only to discover how much we don’t control.
As financial planners, we attempt to incorporate a lot of what we do know into plans, plus a number of identifiable uncertainties. As plans are complex, success is based on many criteria, some more obvious than others. We start with the things we can calculate, such as investments, savings, income, and spending. Far less certain plan components include future healthcare expenses, interest rates, and how the stock market might perform. Then there are the things we think we know, including how long we’ll continue to work at our jobs and perhaps how much we’ll inherit from relatives. And lest we forget that whole longevity question; how long do you plan to live?
Financial plans are living documents that flex as life unfolds. We work with clients to help them to determine how much they should spend on vacations or how much to contribute to a child’s or grandchild’s 529 plan. Sometimes those decisions are based on investment returns. If a portfolio goes up thanks to a bull market or if savings increase due to an unexpected bonus, more discretionary dollars may be available. It’s a work in progress.
We used to tell clients to focus on the things they could manage, such as housing costs or their careers, but we realize that even some of those decisions may be out of client control. While you may be able to control how long you work, you may no longer be able to dictate how long you’ll continue to work at your current job or even in your field.
The 400-pound elephant in the room, of course, is health. It costs money if you’re sick, and it can take you out of the workforce earlier than you planned, thus depriving you of income. Studies show people often plan to work longer than they actually do, and those lost years typically relate to poor health and job loss.
While the notion that God may laugh at your plans may be sobering and perhaps even overwhelming, throwing up your hands and saying “What’s the point?” isn’t the answer. In fact, part of the planning process involves planning for contingencies. When clients call with bad news, we’re often able to point to a contingency plan to cover cash flow for the next year or two (or longer). We’re able to do that because that’s part of the plan. (“Oh, so that’s the point of the home equity line of credit!”)
A financial plan is a guide; it’s far from an absolute. It’s a place to start and to chart a path, even if we know that straying off that path is inevitable.
If it has been a while since we reviewed your plan, perhaps it’s time to do so. If planning is not a certainty, neither is hope a strategy. We’ll work hard to get you where you want to go.