If you spend time on social channels, there’s a good chance you’ve seen the meme GIF about “what overthinking looks like”. It shows a young child crying in a pool, appearing to desperately cling to a lane marker rope to keep his head above the water. The mother rushes in to help him stand up in water that only barely comes up to his knees. The somewhat humorous intent, of course, is don’t overthink things – deal with the reality of a situation and you will be fine.
It’s a cute little message. But it made me wonder – where is the cute GIF about underthinking? There really isn’t one. Nor should there be. Because the result of underthinking is just bad decision making. And there’s nothing humorous or cute about that.
The business world has always placed emphasis on decision making and its importance in organizational success. In fact, our consulting firm worked with a number of companies, teaching an adaptation of the Blake Mouton Managerial Grid – a way of evaluating decisions relative to the task that needed to be performed and the people that are impacted. I won’t go into the details here. The point is, business success often depends on a systematic approach to decision making. We should carry that forward into our personal decisions.
A simplified version of systematic decision making is a 5-step process:
Step 1: Identify the Goal. This may be the most important step since it is the basis for all the rest. For this exercise, let’s say your goal is to retire comfortably as early as possible. There are some parameters here (“comfortably” and “early as possible”) that can help us identify the best options.
Step 2: Weigh Your Options. For this, you will need information. Given the goal, some of the options may be drawing Social Security as soon as possible. Or maybe tapping into your 401(k) at first and waiting a few years so you can draw a larger check from Social Security. This is the time to talk with friends and experts to learn all opportunities.
Step 3: Consider Consequences. The previous step is so important because it will help us consider the consequences of each option. Will we deplete our nest egg too soon if we wait too long to file for Social Security? What will be our tax burden, and will that eat away at our savings? This step may even help to identify other options like part-time work during retirement.
Step 4: Make Your Decision. Remember the “overthinking meme”? At some point, you have to be satisfied that you’ve collected all the options you need and evaluated the consequences of each. That should lead you to the best decision that fulfills as many parameters as possible and gives you the best outcome.
Step 5: Evaluate Your Decision. Sadly, this is often the step that gets overlooked. But, even if you did a great job with the first four steps, you may be surprised with part of the results. The worst thing you can do is cling blindly to a decision just because of the effort you put into it. Evaluate your decision and make adjustments as needed.
One other thing to remember along the way is you don’t have to do this all by yourself. Of course you will have many conversations with family and friends. And AARP is full of planning resources. You can also check out The FIRE movement (financial independence, retire early) – a group that appears to be setting new standards in financial planning for retirement. Again, do your research!
We know that life is full of important decisions and retirement is one of the most critical. Unlike the “overthinking meme”, we can’t count on someone to rush in and rescue us when we make bad decisions. Fortunately, using a good system can go a long way toward helping us make good decisions.