4 Steps to Help Make Better Retirement Decisions

4 Steps to Help You Make Better Retirement Decisions

Being More Decisive in Your Retirement Planning

When planning for retirement there are many tough decisions you must make, some of them being irreversible. With this in mind, it would be prudent to have a decision-making framework to help you make the most of your retirement. 

In Decisive: How to Make Better Choices in Life and Work by Chip Heath and Dan Heath, they discuss how to make more effective decisions. By using their WRAP model, you may be better equipped to face what they call the 4 villains of decision-making.  

The Four Villains of Decision Making

Everyone likely has the intention to make decisions that are in their best interest. What gets in the way of these decisions are what Chip Heath and Dan Heath call the four villains of decision-making.

Narrow Framing

The tendency to see things in binary, black and white, terms.

Confirmation Bias

We seek information to support our current views or recent actions. We want reassurance rather than the truth.

Short-term Emotions

We allow our current feelings to cloud our thinking. We can feel differently about the same choice even if the numbers haven’t changed. Think analysis paralysis.


We think we know what the future holds but we really are making an educated guess.

Making Better Decisions With the WRAP Process

By understanding what could get in the way of making better decisions, Chip Heath and Dan Heath developed a framework to combat these villains. It is called the WRAP process and includes the following four steps.

Widen Your Options

This is where you broaden your search when looking for the possible options available to you. Narrow framing can cause one to be blind to your choices.

Reality Test Your Assumptions

You seek outside information when reviewing your options. Some of this information is meant to be disconfirming. The confirmation bias leads you to only seek self-serving information. 

Attain Distance Before Deciding

You try to look at the bigger picture and how your choice fits into it. Short-term emotions can cause conflicted feelings and tempt you to make a bad choice.

Prepare to be Wrong

This is where you plan for possible future outcomes and how you will react to those events. Overconfidence can lead us to believe things will play out in a specific way.

An Example of How the Four Villains’ Can Creep into Your Retirement Planning

Someone who is approaching retirement and is considering how they should invest their portfolio.

  • They ask themselves “Should I invest in the stock market or not?” (Narrow Framing)
  • They believe the stock market is too risky for a retiree and seek information to validate their beliefs. (Confirmation Bias) 
  • When making their choice they choose to let their intuitive feelings drive their decision when their situation hasn’t changed. (Short-Term Emotions)
  • They are certain the stock market will not serve them now or in the future. (Overconfidence)

An Example of How to Use the WRAP Process

If they instead used the WRAP process when making the same decision as above:

  • They ask themselves “What are the possible ways I could invest in the stock market? How could I manage the risks I take when investing better?” (Widen Your Options)
  • They review information on the long-term historical returns of stocks and other asset classes. They also seek expert advice and options to understand the pros and cons of investing in the stock market. (Reality Testing Assumptions)
  • They look at the long-term potential of investing in the stock market and how that impacts their retirement plans. They place less weight on short-term market volatility. (Attaining Distance)
  • They test their investment allocation using software that runs their portfolio through many hypothetical future scenarios to see their likelihood of success. They determine if they are comfortable with the probability of things not going as they had hoped. If they aren’t they would need to make adjustments before they make their final decision. (Preparing to be Wrong)

The WRAP process can be useful when making decisions when planning for retirement. While you can still have bad outcomes, the focus is placed on the analysis rather than the results.

Feel free to email us at info@westernreservecm.com with any questions you have. If you would like to schedule time with us to discuss your specific situation click here.

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