The average American hates looking at their financial statements. They are often long, poorly formatted and remind us of all the things we recently wasted money on.

Luckily there is one statement you should avoid completely – your retirement statement.

Constantly reviewing and analyzing these statements as one does a bank or credit card statement is a really bad idea. Below I outline 5 reasons why you should avoid this at all cost – helping you understand a bit about psychology and the market at the same time.

1)    Balances go up and down

The fact of the matter is, the stock market goes up and down. Over 189 years from 1825 to 2013 we have seen 134 years of up markets and 55 years in down markets. The market goes up, goes down and goes back up. Overall, retirement planning should not be adjusted based on the market changes, big downturns or big up-turns.

At the end of the day, neither you nor I are hedge fund managers and nor should we try to be. If you want to play the market, be my guest – I take .005 percent of my net worth and trade options. Some years I make some money and some years I lose, I enjoy the conference calls and the market research. This is done completely separately from my long term retirement planning and ensures that I fill my active market trading side without diluting my long term goals. In actuality, we have neither the personal resources to commit to run a stock portfolio nor do we have the budgets to hire all the necessary analysts to be successful.

There will be plenty of years when things are great – returns outpace 30%. There will also be plenty of years when things are really bad. Account balances go down 30%, 40% or more in one quarter. These bad days and the talking pundits will make us emotional and want to react. Don’t react and hold the course – remembering that balance go up and down. When it’s down, they talk about the end of the world and how things won’t get better. Turn off your TV and go for a walk! Don’t log into any of your retirement accounts. This too shall pass!

2)    Your retirement is your ‘do not touch’ money

A retirement account should be thought of as money that is not really yours. That is right, money that you do not own. Because, well technically, you can’t touch it for years. It is not money you can access today, and even though you may be able to take a loan to buy a home, you shouldn’t. Retirement money is your ‘set it and forget it’ money. This money should be considered a future option for a fulfilled life. It is an option that allows you to continue to live the life you want. Prior to your retirement date, this option is null and void – meaning it is essentially worthless. By thinking about this retirement money as if it is binary you will ensure you stay away from this retirement money, treating it as money you don’t have, not using it as part of your net worth and ensuring you do not touch that money.

3)    The Wealth Effect

Defined as the change in spending that come with the perceived change in wealth, the wealth effect is another reason not to check your retirement accounts. For example, the stock market goes up 20% one year and on paper you are a millionaire! Though in effect, you cannot touch this money (as stated above) and your actual monthly income has not increased. You perceived yourself as wealthier and this results in the additional spending associated with your new perception of self. Unfortunately, checking your retirement account everyday plays into the wealth effect in a negative manner – of course you can buy those new shoes, the market is up 10% this month and you are indeed “wealthier.” However, in actuality you should continue to live within your means, stick to your budgeted expenses, and play the long game!

4)    Long term investments take a long time

Your investing horizon, hopefully, is decades long. This means you are not going to reach your retirement goals with today’s 3% positive move in the market followed by next weeks 5% negative move. What you care about is the compound interest and the average return over a decade long period. By looking at your retirement accounts on a daily basis, you are adding emotions into the mix – you respond to each and every up/down move. You just need to ensure is that you set up the right accounts from day one, contribute correctly on a regular basis, and have set it and forgotten about it. Yes, we live in a world where we can order food with a push of a button and have it delivered, where you can deposit checks on your phone and do so much more in an instant. Remember, wealth can’t be built in an instant and retirement planning is a long process that needs consistency.

5)    You overthink your plan

It is human nature to overthink – we respond to every tick and slight of hand. In actuality, when focusing on the long term, it is better to ignore the minor items. That’s right, pick your asset allocation from Day 1, invest regularly and leave it alone. Many people watch CNBC or Bloomberg and respond to what a talking head says. Yes, they are educated and more knowledgeable, but they also have a prerogative. When we overthink, we end up chasing performance which results in unnecessary expenses when moving assets around. This will also result in a reactionary retirement approach. Additionally, when you make too many changes to your plan, you have no clear long term path for success, just a glob of different approaches with one counteracting another. Simple and sweet, focus on 10 years, 20 years and longer.

In closing, avoid checking your retirement account everyday. If you are looking for that emotional ego bump, look elsewhere. Retiring and the associated game of saving for retirement is a multi-decade long approach. Checking your retirement account everyday will only add additional stressors in your life. I promise, by avoiding the day to day swings of the market, it will lead to a healthy, happier and less stressful life.

Photo by Ken Teegardin