• Hannah Boundy

Heilmeier’s Catechism: Questions for Science, Financial Planning, and Life

One of the great benefits of being married to a scientist is that I get to learn about a lot of different things that I probably wouldn’t ever take the time to learn about on my own. As you can probably imagine, conversations at our dinner table cover a variety of topics, ranging from things like the Chinese economy and why certain countries are at risk of deflation to which precious metals are most valuable for space travel and how you can use wavelengths to sort different kinds of plastics. Of course, coming from two very different backgrounds, we are often quick to confuse the other when we start to use the jargon of our specific professions. As a result, we are both learning to simplify what we’re talking about so that the other can understand, an exercise that has been surprisingly beneficial in our respective workplaces.

The other night my husband was discussing a proposal that he was working on and mentioned something called the Heilmeier questions that he was using to clarify what he wanted to do. Despite being difficult to pronounce, the questions themselves are actually quite simple and are meant to simplify. The goal of the Heilmeier questions is to clarify the decision-making process by taking out all of the fancy language and jargon in order to get to the heart of whatever it is you’d like to accomplish. While the questions are often used for scientific purposes, they are seamlessly relevant to pretty much all other aspects of life, including investing and planning for one’s future. To give you a better idea of how the questions work, let’s consider them in the context of helping you prepare for retirement:

Heilmeier’s Catechism:

  • What are you trying to do? Articulate your objectives using absolutely no jargon.

While we help a variety of individuals with a variety of goals, by far, our most commonly used service is retirement planning. When it comes to planning for the future one of the first things we ask people is this exact question: what are you trying to do? What are your goals? Surprisingly, very few have actually thought through what they want their retirement to look like. They know they want to retire, but they’re not sure when or where. Thinking through this question and talking through it with your spouse and family can actually be a really beneficial first step towards preparing for retirement.

  • How is it done today, and what are the limits of current practice?

Initially, this may seem like an odd question when it comes to retirement, but for us, it’s a question we ask ourselves nearly every day. In today’s day and age, the process of retiring can be pretty complex depending on the manner in which you’ve saved for retirement. As we see it, retirement should be a once in a lifetime event that occurs with an eye towards the future. While there are plenty of tax rules that can be limiting, having a professional in your corner who knows all of the rules and how to best utilize the options available to you can make a big difference down the road.

  • What's new in your approach and why do you think it will be successful?

This question is especially pertinent for those towards the start of their careers, and while it’s probably not relevant to ask yourself what’s new about your approach, it is helpful to ask yourself how you’re going to be successful in saving for retirement. Too often we see people make the mistake of just assuming things will fall into place. Successfully saving for anything requires taking action and making sure you’re doing what it takes to meet your goals, whether that’s setting aside a certain amount each month, making sure you’re contributing enough to get the full company match, or committing your future bonuses to savings.

  • Who cares?

The answer to this question should be pretty obvious. Who cares about saving for retirement? Hopefully, you do! One of the best things you can do for your family and for your future self is to simply care about your financial future by making smart choices now. Being prepared for the unknowns can be a really great blessing when an unexpected layoff or a health scare shakes things up and because we also care, we are constantly working to help our clients set themselves up for a successful retirement and financial peace of mind.

  • If you're successful, what difference will it make?

To us, a successful retirement is the difference between staying retired and having to go back to work, which is why we believe it is incredibly important to take the time to understand all the variables and how to make the most out of your given situation. It could mean the difference between traveling to Europe and having to go back to work.

  • What are the risks and the payoffs?

This is another question that we ask ourselves pretty much daily when it comes to investing for retirement. Understanding the risks and payoffs of any opportunity, especially investing, is crucial to making an intelligent decision. Too often we see individuals getting hung up on one or the other, but the truth is that the key to a successful retirement strategy is knowing how much you need when it comes to investment returns, in addition to understanding how much risk your emotions and situation can handle. A unity of the two concepts is essential.

  • How much will it cost?

Like most purchases in life, the answer to this question is really up to you. I can buy a perfectly good car for $5,000 that will get me to work and back again. If I want all the bells and whistles, I’m going to have to be willing to fork over more. Setting your retirement expectations on the front end will help you better understand what it will take savings-wise to provide for the cost of retirement when the time comes.

  • How long will it take?

Again, the answer to this question is up to you. The more you are able to save the less you have to work and vice versa. One of the easiest things you can do to answer this questions is to meet with a certified financial planner and have them build a plan for you that gives you a better idea of how long it will take you to save for retirement given different savings rates.

  • What are the midterm and final "exams" to check for success?

For us, updating your financial plan as time passes, both prior to retirement and during, is key to making sure you’re still on track. Doing periodic reviews also makes it significantly easier to correct things when you’ve strayed away from the path as opposed to waiting until the end when the damage has already been done.

Whether you’re saving for retirement, thinking about going back to school, considering a job switch, or starting a new project for the boss, taking the time to ask yourself these 9 questions can be incredibly helpful. Not only will it make it easier to articulate what you’re trying to accomplish, but it will also give you a better sense of why what you’re considering doing is valuable and hopefully guide you towards the best possible decision. If you'd like to speak with a financial planner about your specific situation, please don't hesitate to give us a call. We're happy to help.

#decisionmakingprocess #HeilmeiersCatechism #financialplan

DISCLOSURE Information on this website and others should be used at your own risk. Past performance does not guarantee future results. Securities investments involve risk; returns in such investments vary and may involve gain or loss. The materials and content herein are not a substitute for obtaining professional tax, personal financial planning, or other relevant financial advice from a qualified person or firm. For full disclosure click on the disclosure link at the bottom.

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