We originally wrote this this piece for Kiplinger, where it was first published. We’ve provided an updated version for the BYH blog here.

There is no shortage of great content available for those who want to build a sound financial plan that considers how you may want to retire someday (especially if you want to do that much earlier than your 60s).

You’re at an excellent place to start right now; between our blog and podcast, Beyond Finances, and the services we provide, you have a lot of information you can dig into here.

You also have countless options of other resources you could dive into: from books and podcasts to hiring your own personal financial advisor to optimize your planning efforts and so on.

While the amount of information out there can be overwhelming, the benefit of such volume is that you’re less likely today than ever before to leave something critical out of your financial planning, or to forget something altogether…

But there is one big exception to that.

The Factor You Might Forget When Planning for Long-Term Financial Success

That crucial variable that you might forget to plug into all your financial planning calculations and projections is nothing overly complicated. In fact, it’s actually a very simple fact of life.

But it’s also intangible, unpredictable, and extremely difficult to manage because most people assume it doesn’t apply to them. 

That can present a serious threat to your financial plans. If you fail to account for this variable, all your careful planning to get to your biggest financial goal—like financial independence, or early retirement—can go out the window.

What is this mysterious X factor?

It’s change. Specifically, it’s the fact that you change.

As Harvard psychologist Dan Gilbert puts it, “Human beings are works in progress that mistakenly think they’re finished.”

He goes further, saying, “The person you are right now is as transient, as fleeting and as temporary as all the people you’ve ever been. The one constant in our lives is change.”

Gilbert explains that we fail, over and over again, to understand how much we change thanks to the “end of history” illusion.

This is the false belief that we consistently have throughout life that the person we are in the present moment is the person we were meant to be; we’re finally done growing and learning and changing and we’ve arrived at who we truly are.

This is part of what makes this factor so difficult to account for when doing something like financial planning or retirement planning; most people will believe that it’s true for other people, but not for them!

You would do well, however, to work with the assumption that at the very least the version of you who eventually retires at 45 or 50, or who generates enough wealth to consider themselves financially independent, will not be the exact same as the version of you who made those achievements possible throughout your working and saving years.

The Person You Are Today May Not Be the Person You Are Tomorrow

Financial planning—especially when trying to plan for events decades in to the future—is inherently difficult and massively complex.

We might start saving in our 20s or 30s and seriously strategizing in our 40s and 50s while needing to account for what’s happening in our lives right now and what will happen in 20 or event 30 years down the road.

It’s hard enough to predict with any degree of accuracy what your career, your finances, and your life will look like next year, let alone in another five.

In fact, go ahead and think back to where you were five years ago. Would that person be shocked at what life looks like now?

Of course, the global pandemic that turned 2020 upside down was a curveball no one could have expected. But setting aside the current events we’re all dealing with, think about not just how life might look different today but how you may have changed.

What’s different about your interests or your hobbies? Has your devotion to them grown, or has your attention moved on to other pursuits? Even aspects of your personality can shift with time!

And what about priorities and values? Have you found that these have evolved with the seasons of life?

How about your goals? As you’ve achieved what once seemed impossible, how has your thinking about “what’s next” evolved for you?

Change doesn’t need to be radical or dramatic; it can be slow and gradual. But it’s still a shift, a departure from what once was—and it’s something that you probably would not have predicted five or 10 years ago.

(In fact, Dan Gilbert explains that people are every age, from 18 to nearly 70, underestimate how much they’ll change in the future.)

Change isn’t a bad thing, either. As you learn, grow, develop, and experience more, change naturally flows as part of those processes.

The bottom line is that we can reasonably expect to change over time. The person we are right now in this moment is probably not going to be the same as the person we’ll be in 10, 20, or 30 years from now.

And that’s okay…but how do we handle something like financial or retirement planning if that’s true?

How do we start planning a secure future for a person we don’t yet know: our selves who exist years or decades from now?

How to Plan Financial Success for Your Future Self

Financial planning would be easier if there was some strategy you could use to determine what kind of person Future You is likely to be.

Unfortunately, there are no Buzzfeed-type quizzes that you can take to find out your Retirement Personality (at least, they don’t have that yet).

There is no practical way to reliably predict what your life will look like decades from now, or what you will be like.

What we can do, however, is create a financial and retirement plan that allows for freedom and flexibility. That plan should also strike a balance between life today and life far into the future.

The goal should be to design a financial strategy that gives you the means to pursue what you want both today and tomorrow.

How can you accomplish this? Start by following these fundamental guidelines:

Strike a balance between today and tomorrow: In practical terms, this means finding the right savings rate that gives you a high probability of having enough money in the future without taking away opportunities and experiences that are important to you today.

I generally recommend that my clients put 20 percent of their gross income toward long-term investments (like retirement accounts or a portfolio in a brokerage account they can leave invested for at least 10 years).

I’ve found this guideline gives people a great chance of being able to fund future lifestyles, but still provides money left over to enjoy right now.

Don’t assume everything will work out perfectly: Avoid developing a financial plan and strategy that requires everything to go exactly right in order to work.

We can, and should, expect the unexpected, which is why we develop cash reserves, we make Plan Bs, and we put goals in priority order so that we clearly understand what’s on the chopping block if we can’t do everything we want.

Give future you options: It’s a big red flag if your plan only works if you work until you’re over 70, or stay in the same house in the same town for the rest of your life—and you’re making that decision in your 30s or 40s.

Making massive financial decisions or commitments that you have no choice but to keep for decades to come (in order to make room in your financial life for something you want now) feels a bit like robbing Peter to pay Paul.

From your vantage point of today, it might seem like no big deal, but remember: things change.

Your financial plan should provide you with enough wiggle room to chart a new course if you realize you’re tracking the wrong way.

Plan conservatively for the future: Overestimate your expenses, and underestimate how much money you’ll have coming in from various income streams.

Run projections assuming you won’t receive Social Security income (or at least, a reduced benefit than what retirees get today).

If you end up with higher cash inflows and lower outflows, then you have a surplus that provides more freedom and flexibility to use your money for many purposes—whatever they may be in the future.