Retirement plans: Why care about the long term?

Retirement plans can be tricky to make since life can change dramatically from year to year. But no matter where your path takes you, you'll grow old and be happy to have made retirement plans.

Adam Lau / The Advocate / AP / File
In this photo taken June 3, 2011, Carolyn Callahan, right, listens as Brian Babin plays his tenor saxophone for residents of Southside Gardens Independent Living in Baton Rouge, La. It is important to make retirement plans early, even if you usually have a hard time planning for the future.

Mark sent me an email regarding my recent article, Some Thoughts on the Long Term, in which he asked the following question:

I still don’t see any compelling reason to worry about my future more than about five years down the road. I can think about where I’d like to be in ten years, but life shifts so rapidly that no matter what I think of it won’t happen. Why should I even think for a second about anything beyond five years or so?

It’s a good question and Mark does make a good point. I think there are a few pieces, though, that he’s missing.

Unless you unexpectedly die at an unnaturally young age, you will grow old. It doesn’t matter where your path leads you. Eventually, you will grow old. Eventually, you won’t be able to keep up with the levels of productivity that you have right now. Eventually, you will be less employable.

Retirement plans are a long-term savings goal that makes a lot of sense to participate in for those reasons. It’s preparation for a situation that you know will happen down the road. Unlike many long-term goals, aging will happen and it’s worth your while to be prepared for it.

Most other worthwhile long term goals are centered around the accumulation of flexible skills and resources. Many people set goals in the five to ten year range in many areas: career advancement, business building, personal growth, a house down payment, and so on.

The vast majority of these goals have results that are incredibly flexible.

For example, if you’re saving for a down payment and your life path changes so that home ownership is no longer a goal you’re interested in, you still have a significant amount of financial resources saved up that you can apply toward whatever direction your life is now headed.

Another example: if you’ve set a long-term goal of heading the IT department at your company and you spend years building an appropriate resume and skill set, only to see your company fold up, you’ve still got a great resume and skill set to shop elsewhere and help your career.

I can go on and on with such examples. The core principle holds throughout all of them: a great long-term goal usually creates resources and skills that are still valuable even if the goal changes.

Many people are motivated by having goals of all terms. I find a big, ambitious long term goal to be really exciting and invigorating. The vision of doing something that leaves a major mark in my life and the lives of others keeps me wanting to move forward on that goal.

Short term goals motivate me as well, but in a different way. They often feel very reachable, as though it’s almost inevitable that I get there.

I can describe the difference as if you were a person standing on a hilltop in Seattle. There’s a street sign nearby and you could reach it quite quickly. It’s easy to see yourself walking half a block to get there.

On the other hand, you can see Mount Rainier off in the distance, about fifty miles away. Reaching it on foot is a long journey, but the idea of going there often seems exciting (particularly if you’re new to Seattle).

Long term goals are like Mount Rainier. They feel almost impossibly far away, but they look enormous and inviting in the distance. The idea of journeying there excites you and you can’t wait to get going.

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