Do-it-Yourself Retirement Planning: When to Enlist a Professional

September 19, 2014 12:00 am
Derek

Derek M. Amey

Managing Director & Portfolio Manager

My wife and I bought our first home last year. As serial renters for the last 15+ years, we vastly underestimated the amount of time and energy that go into home ownership. As many of you probably experienced when you purchased your first home, my wife and I had a steep learning curve on what it takes to MAINTAIN a home, never mind make improvements! Luckily for us we have some handy relatives, and when in doubt, the internet is full of how-to videos. We’ve been enjoying doing some small projects around the house because the great thing about many do-it-yourself projects is the immediate feedback. The feeling of accomplishment when we lay our tools down has been great.

For example, we had an outdoor spigot that leaked for much of the winter. We watched as giant icicles grew from the leak and as the size of the icicles grew, so did my fear that the pipe would burst. After a few attempts to determine the culprit we were able to apply a fix and thankfully stop the leak. It was a simple process: determine the issue, figure out a plan to address it, apply the fix, and then wait and see if it was successful.  The immediate feedback for many projects around the house let you know if you fixed it or if you have to try again.

However, some projects are just too big or the risk is too great for my wife and me to attempt. Last November we had no heat when our boiler stopped working. I admit I was too afraid to attempt this project myself. Messing up a project that involves oil and fire risked my death! I knew my limitations as a “handyman.” I lacked expertise, I lacked the tools and I lacked the time to learn what needed to be done to fix it. I was also worried that even if my heat turned back on, had I merely placed a Band-Aid over a bigger issue? I weighed the thought of doing it myself against the risk and the possibility of me making a mistake, and what the costs would be then if I did. I needed to call in an expert and after a few visits from our local oil company, the faulty igniter was identified and replaced. I believe anyone saving for a financial goal, whether it is planning for retirement or funding for a child’s college, should start thinking along these same lines.

If I go it alone, what am I risking and what will be the reward?
Identifying large financial issues should be fairly straight forward. “Am I saving enough for my daughter’s college?”, “Can we afford to retire?”, “How do we balance our current needs with our long term goals?” Following my house analogy, there is an issue with many of these questions in that there is no immediate feedback.  Retirement for many Americans is a huge source of stress, and thankfully far enough in the future that current “fixes” can be applied. However, far too many Americans will not know if their “fixes” were real solutions or just a Band-Aid, until it’s far too late.

There’s no shame in asking for professional help.
At first I was frustrated that I couldn’t figure out what was wrong with my boiler, and that I couldn’t fix it on my own. And yes, I was also mentally wondering “how much is this going to cost me?” before the professional even arrived. However, it was all ego and bravado and I quickly got over it when I realized one false move could cause my house to blow up. Once the repairman arrived, I felt relieved that he was there and that a professional was assessing the situation. In fact, he also spotted another problem we had with our current system. Once that was fixed we cut down on the amount of oil I was burning, so in the long run we saved money. I can only imagine how lightly my wife would have slept the night that her husband, with no prior experience and not many tools, was down messing around with the boiler. While retirement planning or saving for a child’s education may not risk physical harm, the damage to one’s retirement lifestyle or college choice due to finances is still great.

I’m not insinuating that everyone MUST seek out the help of a professional. I’d like to think that as a college graduate, that if I had spent enough time reading and watching videos on boiler maintenance I probably could have fixed it myself. How long that would have taken is anyone’s guess, and we were freezing without our heat. Fixing a boiler, or ensuring your retirement plans are on track, can be done by most anyone if the person has the drive and massive amounts of time and energy it takes to become an expert in their task. It didn’t take much for me to know deep down that I wasn’t going to be able to do that and that I would be placing my family in danger by trying to go it alone. Therein lies the biggest question: are you risking too much by attempting to do this on your own? If you’re afraid to admit you need help, I encourage you to swallow your pride and find someone you trust and ask. Huge financial goals are not leaking faucets; for most of us they are broken boilers.

Derek Amey serves as Managing Director and Portfolio Manager at StrategicPoint Investment Advisors in Providence and East Greenwich. You can e-mail him at damey@strategicpoint.com.

The information contained in this post is not intended as investment, tax or legal advice. StrategicPoint Investment Advisors assumes no responsibility for any action or inaction resulting from the contents herein. Derek’s opinions and comments expressed on this site are his own and may not accurately reflect those of the firm. Third party content does not reflect the view of the firm and is not reviewed for completeness or accuracy. It is provided for ease of reference.