Saving Your “Nuts” For Retirement

Out here in New England, we’ll soon be entering what my mom has dubbed “suicide squirrel season”. Winter is coming and food will be scarce, so our rodent friends begin a mad dash to build their winter reserve.

In their frenzy they bolt across busy streets and oncoming traffic. Squirrel roadkill is no more unusual on an October day than the gold, brown and red leaves blowing about.    

I’ve recently learned a few interesting things about the Eastern gray squirrel. It’s a misconception that they hibernate. They’re active all winter long except for days with the most inclement weather. They also don’t store their nuts at home. Instead, they bury their nuts in the effort to deter would-be thieves. A University of California at Berkeley study found that squirrels bury their nuts according to size, type and taste. Every nut has a place and purpose.

Humans exhibit their own squirrel-like behavior. But instead of nuts, we save dollars in anticipation of retirement. We save so our tomorrow can look like our today.

In the middle of winter, squirrels have no qualms digging into their nut cache. But people are far less instinctual. Some of us will go to great lengths, doing everything BUT touch that nest egg. I frequently witness people working jobs they hate, delaying dream vacations or sticking with a less-than-ideal status quo even when there’s enough savings to justify big changes. Many will even die with more money than they have presently because of their aversion to spending. A good problem to be sure, but trust that no squirrel ever finishes winter with more nuts in reserve. Why isn’t it easier to spend our retirement savings?

The Family Circus has been a staple of America’s funny pages for over 60 years. There’s a recurring imaginary character named “Not Me” who is conveniently blamed by the children whenever a scapegoat is needed.

Similarly, there are many imaginary characters that plague us as adults. I’ve dubbed one “What If”, a peddler in fear – both real and exaggerated.  There’s nothing wrong with a little paranoia. Many of the first dollars we save are motivated by “What If” questions:

  • What if I lose my job?
  • What if my car dies?
  • What if there’s an unexpected, expensive emergency?

But as we approach retirement the questions “What If” poses become more consequential, because the stakes are now higher:

  • What if the market crashes?
  • What if taxes are increased?
  • What if I have a health emergency?
  • What if I outlive my money?

These aren’t unreasonable questions but left unanswered they can leave a retiree frozen like a squirrel in headlights.

Despite what the copious amounts of roadkill would imply, squirrels are not suicidal, though the anecdotal evidence certainly suggests otherwise. It’s a familiar scene for many New England drivers: you see a squirrel in the road. It sees you back. It first darts for the shoulder of the road, but then abruptly turns back toward the center yellow line. It reverses yet again, narrowly avoiding your tires, and somehow miraculously scurries back to the opposite shoulder. Was it trying to get hit?

You can chalk up the erratic behavior to misplaced instinct. Turns out all the bobbing and weaving is exceptionally good for confusing hawks. Not so much with cars. The squirrel has the right idea, but for the wrong situation.

Similarly, is it possible that our instinctual fear is misapplied?  Sure, but how can we know for sure when the future is so uncertain? We can’t. But we can get close.

The solution can be found in combining technology and stress. With technology we can project our future by making assumptions about our spending, market performance, inflation, tax rates, longevity and more. But we can be unkind. Stress that projection! Crash the market. Live past 100. Raise your taxes. Simulate a health event. The meaner you get, the more confidence you can potentially gain.

Confidence? You bet! My belief is that retirement confidence is born out of worst-case planning. What do you want? To retire early? Travel more? Have a second home? Be more generous with charity or to relatives?

Whatever your goals imagine if your projection indicates they can still be accomplished even IF the market crashes IF inflation, tax or spending increases IF you have a health event or IF you live well past average life expectancy.  Might it be easier to spend your savings if you’re confident your plans hold up under scrutiny?

We can never have absolute certainty. But we can’t take the money to squirrel heaven either. You get one crack at retirement. Make the most of it. Don’t let your hard-earned nuts go to waste.

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