Roger Nusbaum submits: A financial plan that is.

If your financial life is more complicated than how-much-ya-got-and-can-you-live-on-4%-of-that, you need a plan.

There are so many ruinous mistakes that can be made from spending too much, spending from the wrong spot first, investing too conservatively, investing too aggressively, creating a tax problem, not understanding inflation, not knowing how to assemble a portfolio, making bad decisions about social security, knowing whether you need some sort of insurance product, not having a back up plan if the first three years of your retirement looks like 2000-2002... any others?

This is not a pitch to hire anyone, but for you to either empower yourself to do the job, or if not to find someone who can help you.

I do think the work can be done on your own. It is not easy. I know I have a lot to learn about the topic. Portfolio management (what I do) is not financial planning. I know a lot of questions and few answers which would not cut it. The fewer moving parts in your financial life obviously the easier making your own plan will be.

The first building block of our plan is that we live below our means. This is something I have touched on many times here. We live in a modest cabin that we love and have no plans to "trade up."

I have faith in the 4% rule of thumb (5% is very reasonable too). Whatever we put away, we'll have to get by with 4%. Planning for a certain number is fine, but if you "need" $2 million but you end up with $1.5 million...

Tying in is the idea of saving as much as you can. This probably means that some years you won't save enough and some years you will over save. You can only do what you can do, but chances are we all need to stretch a little bit in this regard.

This is not easy at all, but it is not impossible. Maybe deciding whether you need help or not needs some uncomfortable introspection, but one way or another you need to map it all out. The idea here is giving yourself the best chance for however you define success.

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