One of the biggest obstacles that must be overcome during financial planning is the fear of getting started. To many people, planning a retirement is incredibly overwhelming. There can be many moving pieces: account balances and contributions, pension projections, debt levels, social security, part time work, insurance, taxes, etc. Then there are all the goals one might have as well: age to retire, income needs, traveling, a new home or car, helping your children, etc. Many plans get complicated very quickly and keeping things as simple as possible can reduce a lot of anxiety.
One way to reduce complexity in your financial life is to combine retirement and other taxable accounts, which may help reduce fees and the number of mailings you get. That alone can go a long way in the quest for simplicity. But even if you have just one account, simplifying your approach there can also bring peace of mind. A well-diversified portfolio does not necessarily need 100 different individual investments. It might not even need a dozen depending on who you talk to.
Another great way to simplify things is to know what you need. Having a monthly budget for the essentials in your life is of utmost importance when planning for any stage of life. If you are starting from scratch, look back at your bank statements and try to categorize your spending into needs and wants. The process itself is not necessarily simple but the results should be.
Simple is sometimes used to describe naivete which I have always thought strange. To me, simple is pure, uncomplicated, basic, modest, and essential. When I think of all of the financial planning clients I have worked with, those who’s lives were the “simplest” were the most likely to be the happiest. Those who spend their time with family and friends in their backyard cooking on the grill every weekend find the simple things in life not only rewarding but inexpensive as well. Money can go a long way in providing security, but as Sir Paul McCartney once said, “money can't buy me love”.