Do you have a generally positive or negative impression of the word “retirement”?
I ask because it dovetails nicely with a series of questions (inspired by Rick Kahler) that I use to begin most speaking engagements. These questions are designed to incite self-awareness, offering us clues about how our life experiences have shaped the (often unarticulated but powerful) beliefs that unavoidably influence the decisions we make with and for money.
Regardless of an audience’s homogeneity, their responses are consistently inconsistent. I have, however, seen some generational persistency on the topic of retirement. For example, on average, baby boomers have a generally positive view of retirement—no doubt shaped in part by the incessant financial services commercials that promise a utopian post-career existence with beaches, sailboats, golf and an unlimited supply of vintage Pinot Noir.
On the other hand, the finance and accounting students that I had the privilege of teaching at Towson University—almost all members of the Millennial generation—had a generally negative view of the notion of retirement. This is for two prominent reasons:
- They pictured hot, humid, early buffet dinners in rural Florida.
- They don’t think that the American dream of retirement is available to them.
According to Travel + Leisure magazine, “Charleston is a remarkably dynamic place, so it’s no surprise that it has achieved its highest ranking ever in our survey as [2016’s] best city in the world.”
It’s the first time a U.S. city has received the top honor, but Charleston ranked No. 2 last year and has been ranked the No. 1 city in the U.S. and Canada for four years running. As scored by Travel + Leisure readers, Charleston received its top-ranked status based on six categories: sights/landmarks, culture/arts, restaurants/food, people/friendliness, shopping and value.
But please allow me to give you the top three reasons why my family moved to Charleston two years ago, and the reason we’ll stay (and invite you to join us).
“Hope deferred makes the heart sick, but a longing fulfilled is a tree of life.” So reads a Solomonic proverb penned in the 10th century B.C. Consider with me, however, a contemporary application of this ancient wisdom, especially in the realm of personal finance.
“We’ve got to apologize, Tim,” said a financial planning client with whom I had a great relationship.
“Whatever for?” I asked.
“You know that new Lexus? The one that backs itself into a parallel parking spot?”
“Yes, I’ve seen the commercials.”
“We bought one,” the client said, with his head bowed in apparent shame.
I’d never communicated that these folks—or anyone, for that matter, who has sufficient means—shouldn’t use said means to purchase a vehicle of their choosing. But the general impression the public has toward financial advisors and educators seems to be that we all think the best use of money is in storing it up and avoiding its deployment. Defer, defer, defer.
Money, after all, doesn’t disappoint you, or express disappointment with you.
It’s not that money is inherently bad or evil, but it’s not inherently good or righteous either. Money is simply a neutral tool that can be used well or poorly. It only has the value—the personality and the relational standing—that we give it.
One of the few criticisms I have of the movement to explore the psychology of money is its use of the phrase “your relationship with money.” Unintentionally, this gives money entirely too much credit by implying personhood. Indeed, if you have a “relationship” with money, you’re likely elevating it unnecessarily, and maybe even subconsciously devaluing those in your life who actually have a heartbeat.
How did we get here, to the point where we’ve personified—and in some cases deified—the “almighty” dollar?
Recently, I had the distinct privilege to join Sheinelle Jones on the Today show, discussing some rapid-fire personal finance issues in Simple Money style. Is now a good time to buy stocks? Is it a good time to buy, sell, refinance or renovate a home? We even discussed a version of the Simple Money Portfolio and my top two picks for cash flow apps that can improve your financial situation. Click HERE or on the image below to view the segment.
I love finding financial wisdom in unlikely places, like in art and music. These opportunities are more abundant than you might expect. For instance, the punk-Americana outfit, The Avett Brothers, dedicated an entire tune, aptly titled “Ill With Want,” to the scourge of greed and Mumford & Sons taught us that “where you invest your love, you invest your life.”
The newest melodic metaphor to catch my ear comes from singer-songwriter Jason Isbell. He expresses his appreciation for having work in the title track of his newest album, “Something More Than Free,” but it’s the pair of questions he poses in another song, “The Life You Chose,” that really got me thinking.
“Are you living the life you chose? Are you living the life that chose you?” asks Isbell.
I fear it is the latter for many, if not most, of us. Perhaps we are stuck living a life that has grown into a web of circumstances driven more by external compulsions than autonomous impulsions. For too many, life is lived at the behest of someone else’s priorities and goals, in pursuit of someone else’s calling.
Personal finance is more personal than it is finance. This is a message, grounded in science, that I’m privileged to share in various forms speaking for various audiences. Whether for an association of financial planners, a Fortune 500 company, an academic institution or a non-profit, my strategy is to ENGAGE, ENTERTAIN and EDUCATE your audience, giving attendees tangible takeaways to improve their lives and work.
If you’re interested in having me speak at your upcoming event, you can reach me here:
Unless you made a resolution not to read, listen to or watch the news in 2016, you’ve likely noticed that “the market” is off to a stumbling start. Indeed, one glance at the headlines, at least the ones that don’t involve the presidential election, quickly reveals that the market is having one of its worst starts to any new year. This is a dubious distinction, to be sure.
The factors involved appear similar to those credited for causing the extreme volatility we saw in the fall of 2015—slower growth in China, falling oil prices, geopolitical instability and the threat of bankruptcies in junk bonds. But the optimist’s case seems equally compelling—high-quality bonds (the only kind I recommend) are performing very well, falling oil prices are good for consumers, the Fed’s interest rate rise signals a strengthening U.S. economy and the most recent jobs report was positive.
An objective view of the market reminds us that on every trading day in history, there have been compelling cases to be made for both optimism and pessimism—for purchases or sales. (Remember that every single security transaction involves a buyer and a seller, each of whom believes he or she is getting the better end of the deal.)
Ultimately, there is only one sufficient answer to the question,
In my hometown of Baltimore, there’s an oft-heard saying that seems especially applicable when, like now, the seasons are changing: “If you don’t like the weather today, just wait until tomorrow.” For whatever meteorological reason, it’s not uncommon for an absolutely miserable Monday to turn into a gorgeous Tuesday. Temperatures have been known to swing as much as 20 degrees inside of an afternoon.
A scientific view of stock market history, unfortunately, shows us an even greater propensity for unpredictability and volatility.
Even the years that we refer to as the “good” ones, in retrospect, test our mettle. For example, between 1950 and 2014, a span of 65 years, the S&P 500 ended the year with a gain 51 times (or in almost 80% of them). Not bad. But in how many of those up years do you think investors would’ve found themselves in a “losing” position at some point in the year?
Every. Single. One.
Daniel Kahneman and Amos Tversky legitimized behavioral economics—the study of how people really behave around money, as opposed to how economists say a rational person ought to behave.
Then Richard Thaler and Cass Sunstein applied the lessons of behavioral economics to everyday life with their book Nudge. The duo nudged so successfully that in recent years, their prescriptions have been put to work in corporate retirement plans—and even public policy—on a global scale.
When I spoke to Thaler to discuss his newest book, Misbehaving, a series of stories documenting the rise of behavioral economics, he told me that he has a message for those who seek to employ his methods:
“Nudge, for good.”
And why does he say that?