Retirement Planning: Lessons From The Kitchen

Have you ever felt anxious when trying a new recipe (especially for guests?) You worry whether it will turn out right. Not only is the success of the occasion on the line, perhaps your reputation in the kitchen is as well. Retirement planning and investing can evoke a similar sense of anxiety, though of course the stakes are much higher. In both cases, we have a keen interest in the outcome, matched with a sense of uncertainty about what that outcome might be. As someone who has spent decades doing both professionally – cooking and providing retirement/investment guidance – I offer some tips from the kitchen that can be applied to successful planning for the future.

As a young cook in the ‘80s at Chez Panisse I relished the days when I prepared a dish I’d never done before. I would have four hours to turn an idea into something fabulous. The stakes were extremely high as the restaurant rose to national prominence and the clientele came with lofty expectations. I found the uncertainty exhilarating. It was a challenge to make each and every dish the best I possibly could. We should approach planning for retirement in the same spirit. We want those years to be exceptional, worthy of accolades. Precisely because we can’t know the outcome of our investment strategies with any more certainty than we can predict the result of trying a new recipe, we need to devote extra effort, energy and attention to our financial planning to increase the chances of success.

Tips to Make Your Recipe a Success
If we think of our plan for retirement as a recipe, we can use the following five tips for successful cooking to help guide us in our investment strategy:
•    Use the uncertainty about the outcome of your recipe (or investments) to energize yourself and to help you focus on the project.
•    Create a mental image of the outcome you desire.
•    Understand the process.
•    Use the best ingredients.
•    Taste as you go along.

As you approach a recipe, it helps to have a vision of how the finished dish should look, smell and taste. Perhaps you are cooking a fish soup. You can smell the herbs. The sight of shimmering fresh fish in the aromatic broth is exciting. To return to our parallel situation, investing, I can’t stress enough the importance of holding a specific and clear mental image of your retirement. For instance, I like to imagine walking along the beach in Pacific Grove on a beautiful clear morning. The air is cool and heavy as I watch sunlight pierce the cresting waves, turning them a heavenly shade of turquoise. This scene is awe-inspiring! I could do this walk every morning. Envisioning the minute and glorious details of the future can be the most fun part of your retirement planning. It will guide your process and keep you motivated to stay focused on your vision.

Understanding the Process Improves the Results
One of the best tips I can give both to investors and amateur cooks alike is to understand the process. This means knowing your “recipe.” It is easy to get intimidated by reading a new recipe. But at the same time, you become intrigued, your imagination starts to click in and suddenly you can see yourself performing each step. Start with the big picture and add more details as you progress in your understanding. With investing, you have a certain number of years to work, save and invest. Then the plan is to stop working and begin spending. Along the way you need to understand how best to manage your investments so that they will meet your needs during those spending years. The point is to become more familiar with each step along the way so that you can see yourself performing those steps.

Tip number four: start with the best ingredients to end up with a superlative dish. In terms of your retirement plan, the ingredients refer not only to good solid investments but also include your financial advisor. It is natural to seek expertise in areas you feel unqualified to navigate alone. Solid investments are those selected with your needs and values in mind. To accomplish this, you must seek competent help. The relationship with your financial advisor is extremely important. Does he or she listen to your hopes and dreams as well as review your bottom line? Do the investment strategies he or she suggests reflect your values? Just as you would seek help filleting the fish, you may need help with your investment selection and determining how much you can safely spend from your nest egg.

Finally, the cook interested in making sure the dish comes out as planned, will taste along the way. In terms of retirement planning, this is the monitor and adjust-as-needed part of the process. Given the number of years over which we will typically manage investments for retirement, it is critical to remain vigilant and on top of the process so that we achieve the outcome we seek. We can use the uncertainty, as well as our vision, to keep us motivated.

The Recipe of Our Lives
We are all trying to create the recipe of our lives when it comes to retirement. Let’s give ourselves every possible chance of success. Using the tools outlined above will increase our confidence in the process and make it more likely that our efforts produce the best results. Use the uncertainty as a motivator…it will drive you to a better understanding of the process. As with any recipe, you will be more likely to have success if you understand it. Envision the outcome, in great detail. Use the best ingredients, from the investments you choose to those who provide you with help. And don’t forget to taste as you go. Keep your plan on track by monitoring changes in your life as well as in your investments. Check for seasoning and serve. Bon apetite!