Meet Uncertainty with Flexibility

In a recent interview, Ray Dalio, one of the world’s most successful investors, predicts that “we are going to go through a time warp in the next five years.” Current AI systems already match PhD-level knowledge across many fields. With this capability compounding daily, fundamental changes are likely for economic policy, military strategy, social systems, healthcare and more.

What does the future look like? What does the future look like for you?

Uncertainty abounds.

Uncertainty is the New Reality

Dalio may not be correct in his view of a time wart, but it is hard to argue with the drivers of change. Technology disruption, economic volatility, climate change, geopolitical tensions and cultural and social shifts are shaping a new era. And the pace of change is accelerating.

As a result, basing our assumptions on the past may be dangerous. The investment adage that “past performance is not indicative of future results” may broadly apply to many parts of our world.

Uncertainty is also true at the individual level. There are many potentially relevant questions, including: how long will I work with my current employer? With the advent of AI, how long will my job exist? With continued advances in health and genomics, how long will I live? How long will I be in good health? Will I have financial resources to support my desired lifestyle?

Since the beginning of time, man has lived amidst uncertainties, but the range of outcomes is more variable than ever.

Planning Amidst Uncertainty

How does one plan amidst such macro and micro uncertainty? Carefully.

It is essential to be cognizant of risk. Understand risk, your comfort with risk, and how you can protect yourself. For example, if job security is a key concern, research which careers provide better protection than others. According to a McKinsey & Co report, fields subject to automation, such as office support, customer service and sales, food services and manufacturing, may be particularly exposed, whereas careers in healthcare, technology, infrastructure may be less risky. Detail risk analysis and strategies to minimize risk can be applied to virtually any aspect of your life.

Understand the risk of your current situation. Doing nothing does not imply insulation from risk. For example, the risk of devastating fires in Southern California has been present for some time; it happened to be last month that a confluence of factors, such as prolonged drought conditions, Santa Ana winds and climate change, made this risk a horrific reality.  

Invariably, it is important to build flexibility into decision-making. Making firm long-term commitments or assumptions that current conditions won’t change is particularly problematic during heightened uncertainty. For example, retiring early can be a precarious decision, particularly if there is no realistic option to continue working if needed or if there is a lack of an income stream or investable assets to counter the risk of living longer or in a more expensive way than anticipated.

Build Flexibility into Place

Flexibility is particularly important for deciding where to live for each stage of life. Place is foundational to building a long, healthy, purposeful and financially secure life, and a place ideal for one chapter of life may be a poor fit for another. People and places change. This is a reality.

As a result, look for ways to build flexibility into your place. Consider:

• If you had to move to another state or area, how feasible would that change be financially, emotionally and relationally? If you are in a spot where the frictional costs of a change are high, understand that you may not be as flexible as you may need to be. Carefully weigh the buy vs. rent decision and, if you do buy, be mindful of the level of debt you assume. People can find themselves effectively “stuck in place” which is a bad spot to be in during times of uncertainty.

• Do you have a friendship network such that you would still feel supported and fulfilled if several friends moved away? If not, consider investing time and energy in nurturing existing friendships and sparking new ones. If this is difficult or unlikely in your current place, consider how a change in place may make friendship building easier or more likely.

• If/when your health changes, can you remain in your current place and thrive? Can your physical dwelling accommodate these changes (i.e., few to no stairs, fall-resistant bathrooms, one-story living, etc.)? Is your neighborhood and metropolitan area a suitable place for successful aging? Good Place Planning accounts for today's needs and desires but also looks for flexibility to support future states.

Embrace a Flexible Mindset

Angelo Duckworth, a professor and author of the bestselling Grit: The Power of Passion and Perseverance, has been a leading voice on the importance of resilience in building a successful life. “Grit is passion and perseverance for long-term goals” according to Duckworth. Part of grit is having a mindset to be flexible as life circumstances require.

So as you manage your life in this area of rapid change, ask yourself: Am I designing for a single outcome, or am I designing for possibility? The world will change, whether we’re ready or not. The question is, will you be ready to change with it? Designing for flexibility, including and especially with regards to place, is one of the keys.

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