Navigating the Retirement Risk Zone

I came across
a retirement finance article recently

that really sent me loopy,
and the title was

“Almost 50% of U.S. households will
outrun their savings in retirement,

but this one money move
could sustain your Nasdaq.”

And the article quotes a study
from the Morningstar Center for Retirement

and Policy Studies.

Once I got past how misleading
and malicious the headline was,

the content underneath
was actually pretty good,

but I thought I'd make a quick video
on the matter to show you all --

people looking to retire happily and well,

how the machine
is actually working against you.

So the headline is what I call fear trash.

If you never look past the headline,
which most people don't,

the illusion that is created is that
our retirements are going to blow up,

and that we need to run for the hills,
do this one thing or we're doomed.

And I hate headlines like this
because they create fear for retirees.

Fear that results in people
who have worked hard,

diligently saved and invested
and force them into delaying

or causing them to delay their retirement
or even worse, maybe

live on dribbles of their wealth
because they're end up afraid

of running out of money.

And headlines like these really
reinforce a core belief I have

that the financial powers that be don't want
retirees like you to spend your wealth.

Headlines like these
achieve their objective

because most of us don't have
time to read the content

beneath every fear based headline.

Now I'm conflicted
because beneath the surface,

the article was actually pretty decent.

It just wasn't geared towards retirees.

Even though the headline really made
it seem like it.

Hugely, hugely misleading.

Now, the central premise of the article,
and the underlying study beneath it,

was that savers should use
an automated savings plan,

something like a workplace 401K
or even an individual retirement account,

where they automate their savings so that
they end up prepared for retirement.

And automated savings plans work
because they force the savings.

Funds are automatically withheld
from someone's pay

before that pay hits the bank,

which reduces the risk of spending it
before it can hit the investment account.

I personally think this kind of
infantilizes adults and doesn't

really solve the real retirement problem,
but I could certainly make the case

that if automated savings helps
someone save who otherwise

would never put a dime away
for their future, then that's a good tool.

Now, the real retirement problem isn't
only one of ending up with enough money.

The real problem is actually a
lack of financial education,

a lack of financial prioritization
as well.

Now, let me use an analogy
that I've used recently.

Think of retirement planning
like building a boat.

You save enough money for retirement.

It's kind of like building
the body of the boat without the guts.

Now, automating
your savings might get you to retirement

with the body of the boat built.
You know you have the structure.

The question is,
how do you take out a boat

and sail across the open ocean
without an engine or a navigation system?

Right. You don't have
the guts and the boat.

The answer is you can't.

Now, financial education, in my opinion,
is the engine in the navigation system.

Financial education are actually
the true mechanics of financial success.

And I believe that financial education
empowers us

to help prioritize
our actions, to understand the why

behind those actions,
and ultimately to understand

the consequences
or the results of those actions.

And that education helps us

navigate the boat across those
unchartered waters of retirement.

Now, ironically, after the article
tells readers that the one thing

they should do to save their retirement
is to automate their savings,

the article actually goes on to say
that if you can’t automate your savings

wWell, here's a list of other things
you can try as well. Right?

So even the headline, this one thing
gets disputed within the article.

The article goes

on to list a bunch of action items
that are actually just un prioritized,

but have the kind of shape
or the outline of a financial plan,

and it still never addresses
the central factor,

which is that a financial
plan is a process of education.

It's not a list of action items,

and it's not a list of things
that you can accumulate.

Yes, a properly built financial plan
may include those action items and things,

but those items and tools aren't useful
if you don't

have the financial wherewithal
to use them wisely and well.

Now, a great businessman and a
mentor of mine and someone who I reference

frequently on these videos,
Alex Hormozi has a great quote.

He says anxiety comes
from having many options,

but a lack of clear priorities.

Now, financial education helps
you prioritize what's important

rather than just throwing darts
in the dark and praying

that you randomly selected and focused
on the right action items by accident.

Anyhow, it's so many thoughts and feelings
generated by such a simple article.

But man, those fear based headlines,
they just bug the heck out of me.

Anyways, I hope you
found this video helpful.

And as a side,
if you'd like to watch a new free webinar

that I've just released, it's on the four
most important steps

to build a retirement plan
that actually works.

You can click the link in the description
to this video below or in the podcast

shownotes below.

Thank you,
as always for your time and attention,

and I'll see you in the next video
or hear you on the next podcast.