Spreadsheet of the Gods

I recently had lunch with a former colleague.

He was part of the interview team that hired me a few years ago and was my direct manager on the last day of my corporate consulting career.

Our conversation gave me the opportunity to explain in more detail why I was leaving.

Ultimately, this is a data-driven decision. I saved enough money and generated income to support career and lifestyle changes.

The consulting world uses data to tell stories and help organizations make decisions. Advice without data has little authority.

DIY retirement planners should also use data to make informed decisions.

There is no financial data tool more ubiquitous than custom spreadsheets.

A former colleague of mine revealed that he outlined his entire retirement plan in an elaborate spreadsheet he had crafted over the past 20 years.

When I mentioned that software tools could simulate a financial plan better than any spreadsheet could, he became defensive and said, “What can they do that my spreadsheet can’t?”

I froze, not knowing how to answer without offending him.

While taking a walk one day, I discovered that my neighbor is a dividend growth investor.

But his proudest achievement in investing wasn’t any single stock pick, but his investing spreadsheet.

This stuff sounds incredible, with data connections, tables, charts, forecasts, revenue, and fancy scripts.

Touching? perhaps.

But if most of us invest enough time, effort, and guidance from ChatGPT, there’s probably nothing we can’t build.

When I suggested that a few plug-and-play portfolio tracking tools might be more comprehensive and easier to use, he scoffed, saying he would never stop using his spreadsheets.

This is his child.

Recently, I learned that another friend was planning to retire early from a long, unfulfilling career.

As an engineer, he also has an elaborate, all-knowing spreadsheet that tracks and predicts his investment and career exit goals.

It can do “everything,” he said.

But he lacked confidence in the spreadsheet once it included the planned construction of his retirement home.

He already owned the land, but building the house added several layers of uncertainty and complexity to his long-term financial situation.

Considering his early retirement ambitions and college expenses, he realized his spreadsheet was ultimately defeated.

I walked him through the tools I use to plan for a career exit that I knew could help simulate a home purchase.

He was willing to give it a try and supplement his Bible.

Armed with more professional tools, he found his retirement goal was closer than he thought.

He also learned that he had more options for financing his dream nursing home and had more clarity and less second-guessing himself.

The nursing home will cost hundreds of thousands of dollars to design and build.

His early retirement exit was a multimillion-dollar calculation with repercussions spanning more than three or four decades.

No matter how good you are at spreadsheets, a decision of this magnitude requires more than a bootstrap spreadsheet.

As DIY financial types, most of us shy away from professional help.

It’s no surprise that we tend to use a flexible and cheap tool that lives right on our computer, disguised as work.

But DIY financial planners who rely on spreadsheets are missing an obvious fact:

• They are not the first to encounter these same planning challenges.
• Well-established best practices already exist.
• Available tools implement best practices by default.
• These tools provide the same functionality as professional advisors, but at a fraction of the cost.
• A community of users checks the math, provides feedback, and shares experiences.
• Spreadsheets are susceptible to formula errors, suboptimal methods, and changes in assumptions (e.g., annual tax rates, inflation).

Retirement planning is complex.

DIY investors should start by simplifying their finances and investment portfolios. Fewer variables can lead to clearer financial clarity for you and your loved ones.

Simplified finances will make your retirement and estate planning efforts easier, whether or not I can convince you that your spreadsheets are inadequate.

Planning tools—coupled with the discipline to use them well—can provide you with the solid data and perspective you need to make confident choices amidst life’s uncertainties.

Spreadsheet Replacement Tool*

Now that I’ve given up on most elaborate spreadsheets, I recommend and use all of these tools.

With insights drawn from the following tools, I feel more confident and secure than ever about my decision to leave my career early for something more fulfilling:

Featured images are from deposit photos used with permission.

Craig Stephens

Craig is a former IT professional who gave up a 19-year career to become a full-time financial writer. He has been a DIY investor since 1995 and started Retire Before Dad in 2013 as a creative outlet to share his portfolio. Craig studied finance at Michigan State University and lives in northern Virginia with his wife and three children. Read more.