Checking Your Inner Scorecard
On a scale of one to 10, how would you rate your life? Have you weathered adversity and come out on top? It is hard to quantify quality of life with numbers. Fame and fortune may appear desirable on the surface, but according to an alternative scoring system, retirees should be examining a different set of standards. What your peers and acquaintances may perceive as worthwhile might have little to do with your own aspirations.
Setting your own clock
Warren Buffett, an investment philosopher, came up with his own term for measuring individual success. Guided by principles instilled by his father, Buffett distinguished between an inner and an outer scorecard, which will be unique for every person. Having traveled his own road to riches, he reached conclusions as to what drives happiness and satisfaction.
The bottom line is that the adherence to personal values creates gratification. Buffett has exemplified that creed in his management practices at his company Berkshire Hathaway. For example, he has always resisted laying off employees or selling corporate assets simply for the sake of replacing them with potentially more profitable businesses.
Buffett is loyal to businesses as well as to people. With regard to specific investments, his commitment to integrity plays out in his portfolio choices. His focus on intrinsic value over temporary fashions in stocks reflects another related aspect. He has made it a core tenet to look for long-term business value, rather than aiming to track brief price fluctuations.
Charlie Munger, Buffett's partner of six decades, brought his view of the end goal of an inner scorecard. Munger, who initially practiced law before joining Buffett, sought financial independence above all: "Like Warren Buffett, I had a considerable passion to get rich. Not because I wanted Ferraris — I wanted the independence. I desperately wanted it."
What it means to play your own game
It seems normal to covet praise and admiration. Humans as a species are wired to be social animals, striving to be perceived as successful members of their tribes. In consequence, it requires discipline and strong convictions to prioritize personal values over the tidal wave of society's expectations. The hardest part is that there is no outside judge to determine the requisite standards or whether you have met them. Only you can define your success. You may not even be certain what you are competing for in the rat race.
It is up to you to create your personal spreadsheet. Start by asking the right questions. Health and relationships are most prized. You already know the other conventional expressions of success:
Owning a house and car
Having a respected career
Raising a family
Enjoying experiences such as travel or sports
Holding power
Leaving a respected legacy
Inner scoring takes an entirely different approach. Self-directed individuals exhibit authenticity, resilience and powerful self-reliance. They do not depend on others' validation or opinions. They may absorb setbacks as a lesson more than as a token of failure.
Retirement scorecards
Most people use a mix of both internal and external scorecards. During their preretirement years, they likely focus on predetermined standards. For instance, students concentrate on their grades, or career workers look to salaries as a benchmark.
Retirement changes all that. Finally, it is your turn to construct your own game and make your own rules.
A balanced personal scorecard could help clarify your priorities. Applying that exercise, you would be emulating companies that use a management technique to define the specific actions needed for reaching targets. Suppose you categorize health and relationships as goals. You would then identify the steps to reach them.
You and your advisers can together make your ideal retirement life a reality. You will likely rely on a combination of internal and external scorecards to guide your individual path.
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