WEBVTT - How to Trick Yourself Into Retiring a Multimillionaire 0:00:00.400 --> 0:00:03.360 Quick, how much do you have saved for your retirement 0:00:03.600 --> 0:00:06.080 right now? I don't know the answer to that, And 0:00:06.120 --> 0:00:09.200 if you don't either, you're not alone. Most of us 0:00:09.280 --> 0:00:12.840 aren't thinking enough about our savings. And this week we're 0:00:12.880 --> 0:00:15.200 going to try to do a little better. This is 0:00:15.200 --> 0:00:29.720 a game plan. Hi, I'm Prince Jessica Levi and I'm 0:00:29.760 --> 0:00:32.639 right back at Greenfield and this week we're talking all 0:00:32.680 --> 0:00:37.920 about retirement savings. It's on our minds because the GOP 0:00:38.120 --> 0:00:41.000 is part of its new tax plan, briefly proposed capping 0:00:41.280 --> 0:00:45.640 contributions to four oh one K tax plans, and people 0:00:45.960 --> 0:00:49.040 heard that and freaked out. Yeah, right now, a lot 0:00:49.120 --> 0:00:51.920 of us have four own case with our jobs, and 0:00:52.280 --> 0:00:56.120 we mindlessly put in as much as we can tax free, 0:00:56.200 --> 0:00:58.480 and we think that will be great our retirement. So 0:00:58.520 --> 0:01:01.640 when we see new knows that there's no longer going 0:01:01.720 --> 0:01:04.480 to be this tax free benefit, it just seems like 0:01:04.480 --> 0:01:06.399 it's going to ruin our whole lives when we're older. 0:01:06.680 --> 0:01:08.640 But when it comes to four oh one case, we 0:01:08.720 --> 0:01:11.720 are actually our own worst enemies. Most of us are 0:01:11.800 --> 0:01:15.559 really bad at saving for one case. I've become kind 0:01:15.560 --> 0:01:19.319 of the biggest vehicle for retirement savings in the US, 0:01:19.840 --> 0:01:24.280 pensions are dwindling, and we'll go away altogether pretty soon. 0:01:24.400 --> 0:01:27.959 Probably our Social Security income for most people isn't enough 0:01:28.000 --> 0:01:31.200 to retire on. So we depend on these corporate plans, 0:01:31.800 --> 0:01:35.720 and yet most people are not contributing to them, even 0:01:35.720 --> 0:01:37.720 when they have the option. Yeah, so of course there 0:01:37.760 --> 0:01:40.480 are some employers that don't offer them. There was a 0:01:40.520 --> 0:01:43.680 startling statistic that I saw in a Bloomberg article that 0:01:43.800 --> 0:01:47.000 only four percent of companies offer them. That doesn't mean 0:01:47.000 --> 0:01:49.559 that most people don't have the option. It's usually small 0:01:49.560 --> 0:01:51.800 employers that don't offer them, But that is so a 0:01:51.840 --> 0:01:54.120 few companies. I just think of it as this universal 0:01:54.160 --> 0:01:56.760 benefit at this point, but it's it's not. It feels 0:01:56.760 --> 0:01:58.560 like an advantage of going to work at a big 0:01:58.600 --> 0:02:00.800 company that like, you get your you get your nice 0:02:00.960 --> 0:02:04.320 retirement package for oh one k. Yeah, and most Americans 0:02:04.360 --> 0:02:06.400 do have the option. The same articles that that eight 0:02:06.520 --> 0:02:09.919 percent of Americans do work somewhere that sponsors some kind 0:02:09.919 --> 0:02:14.000 of four OW one K like plan. But even so 0:02:14.400 --> 0:02:18.560 only make contributions to those plans. So even when your 0:02:18.560 --> 0:02:22.440 employer offers them, for some reason, people are not contributing, right, 0:02:22.480 --> 0:02:24.000 And we should say that in a lot of these plans. 0:02:24.080 --> 0:02:27.400 Your employer will match your contributions, so what you put in, 0:02:28.280 --> 0:02:31.000 they will put in the same amount, you know, up 0:02:31.000 --> 0:02:34.440 to a certain amount. So like, that's free money. And 0:02:35.040 --> 0:02:38.000 there must be people who just really can't shave anything 0:02:38.040 --> 0:02:41.240 off their paychecks. But that's not everyone who's not contributing. 0:02:41.240 --> 0:02:43.239 So we should talk a little bit about the reasoning 0:02:43.320 --> 0:02:47.520 behind having access to basically this free money and not 0:02:48.080 --> 0:02:50.520 taking it. I have talked to people who are just 0:02:50.639 --> 0:02:52.400 out of school. They're young, and they're paying off a 0:02:52.400 --> 0:02:54.960 ton of student debt, and they're deciding between student debt 0:02:54.960 --> 0:02:56.480 and four oh one K, and they feel like they 0:02:56.520 --> 0:02:58.800 can't put in. But then once you don't get in 0:02:58.800 --> 0:03:01.079 the habit of doing it, I think inertia is so 0:03:01.120 --> 0:03:03.799 strong that you just never do it, and then your 0:03:03.960 --> 0:03:05.840 ten years into your career and you missed out on 0:03:05.840 --> 0:03:08.800 all this great free money. I definitely felt that way 0:03:08.840 --> 0:03:10.960 when I was first starting out. The company that I 0:03:10.960 --> 0:03:13.200 started working out after college offered a match I think 0:03:13.240 --> 0:03:15.560 after a year or two, and so in the first 0:03:15.600 --> 0:03:18.239 year or two of working there, I thought, well, I'm 0:03:18.240 --> 0:03:20.040 not going to be getting the match, and I'm so 0:03:20.080 --> 0:03:23.200 broke right now. My salary solo that you know, it's 0:03:23.280 --> 0:03:24.799 too soon to put it in. And then I ended 0:03:24.880 --> 0:03:26.880 up working there for five years and I never got 0:03:26.880 --> 0:03:29.600 around to signing up for the match, and I gave 0:03:29.680 --> 0:03:31.480 up that free money, and I didn't have any savings 0:03:31.560 --> 0:03:33.760 under my belt, you know, when I was like well 0:03:33.800 --> 0:03:38.480 into my twenties. I'm sorry, but that's the thing. It's like, 0:03:38.520 --> 0:03:42.360 when you're young, retirement feels so so far away that 0:03:42.440 --> 0:03:45.960 it feels like you'll always have time to get around 0:03:46.000 --> 0:03:49.640 to it um. But not only is it bad investment 0:03:49.800 --> 0:03:53.200 not to start piling on like those early returns, it's, 0:03:53.520 --> 0:03:56.680 as you say, it's bad psychology because you get this inertia. 0:03:56.800 --> 0:03:58.560 You think I'll do it in two years when the 0:03:58.600 --> 0:04:01.520 match starts, or you know, I'll do it when my 0:04:01.800 --> 0:04:03.640 salary goes up and I start making a little bit 0:04:03.680 --> 0:04:06.560 more money. And then those things happen and you don't. 0:04:07.400 --> 0:04:10.160 You don't want to go back into the HR paperwork. 0:04:10.200 --> 0:04:12.640 You don't want to make the phone call and figure out, like, 0:04:13.280 --> 0:04:15.400 you know, the fifteen minutes of work that it would 0:04:15.400 --> 0:04:18.400 take to like change these you know, make these adjustments 0:04:18.480 --> 0:04:21.279 on your paycheck. And I don't know, it's it's just 0:04:21.360 --> 0:04:23.520 crazy because it's the thing that could help us so much, 0:04:23.560 --> 0:04:25.600 and it's impossible for us to see the benefits in 0:04:25.640 --> 0:04:29.719 the moment. That's definitely my problem. I am have the 0:04:29.760 --> 0:04:32.760 best of intentions. I want to contribute to my phone, okay, 0:04:32.760 --> 0:04:36.520 and I do and I always have. But sometimes I'll 0:04:37.000 --> 0:04:39.240 want to go in and check on it or figure 0:04:39.400 --> 0:04:43.640 I'm gonna raise my contributions, but I get stuck somewhere 0:04:43.800 --> 0:04:47.960 and like a paperwork hole or like on a website somewhere, 0:04:48.080 --> 0:04:50.159 and then I just give up and I forget about it. 0:04:50.440 --> 0:04:52.560 And then a year later, we're doing an episode on it, 0:04:52.600 --> 0:04:55.240 and I'm like, I should start that again. Yeah, yesterday 0:04:55.320 --> 0:04:57.839 we said, as preparation for this episode, we would both 0:04:57.880 --> 0:04:59.159 take a look at what was in our four oh 0:04:59.240 --> 0:05:02.200 one case and what we have saved in social Security. 0:05:02.240 --> 0:05:05.240 And I didn't do it. I also didn't do it. 0:05:05.520 --> 0:05:10.320 And I think it's partly this fear of looking at money. Yeah, 0:05:10.520 --> 0:05:12.640 Like it's it's a scary thing in our culture, which 0:05:12.680 --> 0:05:15.520 we've talked about on the show. When I started at Bloomberg, 0:05:16.080 --> 0:05:19.200 I signed up for the four oh one K and 0:05:19.200 --> 0:05:22.400 then I actually made some decisions about my investment. Like 0:05:22.720 --> 0:05:26.240 I thought, I knew enough to just like diversify my 0:05:26.279 --> 0:05:30.160 portfolio and leave it alone. And I I thought I 0:05:30.200 --> 0:05:31.920 was making good decisions at the time, but I don't 0:05:31.960 --> 0:05:33.920 know exactly what those decisions were, and I'm kind of 0:05:33.960 --> 0:05:36.400 scared to go back and look at them because what 0:05:36.480 --> 0:05:38.440 if they were really dumb and like I would have 0:05:38.520 --> 0:05:42.600 just been better off leaving it alone. Yeah, and definitely 0:05:42.680 --> 0:05:44.960 just ignoring it and not looking at it is is 0:05:45.520 --> 0:05:47.760 going to change whatever bad decisions you made. Or that's 0:05:47.760 --> 0:05:49.560 what it feels like, right Like, if we don't look 0:05:49.600 --> 0:05:52.320 at it, it's not there. It's not there. And you 0:05:52.320 --> 0:05:55.279 said something a second ago that struck me, which was 0:05:55.320 --> 0:05:58.320 that sometimes you think about starting to look at this 0:05:58.360 --> 0:06:00.440 stuff and then you just you just kind of get 0:06:00.760 --> 0:06:03.240 you know, you get stuck in a paper work, Cole. 0:06:03.400 --> 0:06:06.120 Or it feels too inconvenient in the moment, because it's 0:06:06.160 --> 0:06:11.240 this thing that just never feels urgent. Retirement to me 0:06:11.400 --> 0:06:13.840 feels really far away, and it feels just as far 0:06:13.880 --> 0:06:17.400 away as it did ten years ago. And I'm ten 0:06:17.480 --> 0:06:20.240 years closer to retirement, so it should feel a little closer. 0:06:20.640 --> 0:06:22.640 And I think this is true for a lot of people. 0:06:22.640 --> 0:06:25.760 It's just very hard to do something where the payoff 0:06:25.880 --> 0:06:28.400 is going to be decades away, and I think that's 0:06:28.400 --> 0:06:30.640 just human nature. I refused to say that this is 0:06:30.680 --> 0:06:33.520 a personal moral failing. Yeah, it's just hard to envision 0:06:33.800 --> 0:06:36.279 even the sum of money I would need. There was 0:06:36.360 --> 0:06:39.280 another bloom regardicle about how much a million dollars would 0:06:39.279 --> 0:06:41.520 get you, and it was like not enough. And in 0:06:41.600 --> 0:06:45.159 my mind, I was like, how how could could not 0:06:45.200 --> 0:06:48.440 be enough? I understand, but I guess that's something I 0:06:48.440 --> 0:06:52.080 should know. Well, it's not a personal moral failing. It 0:06:52.200 --> 0:06:54.040 is kind of the way our brains are wired. We 0:06:54.320 --> 0:06:57.479 don't think about long term solutions. We think about short 0:06:57.560 --> 0:07:03.400 term gratification. But fortunately, behavioral economists are here to help 0:07:04.080 --> 0:07:06.919 people are thinking about this stuff. They know human beings 0:07:06.960 --> 0:07:10.679 are not wired to make good savings decisions. Richard Faylor 0:07:10.880 --> 0:07:13.480 was just awarded the Nobel Prize for his work in 0:07:13.520 --> 0:07:16.320 the field. And they're doing all kinds of stuff to 0:07:16.360 --> 0:07:20.360 try and help us overcome the biases, these natural biases 0:07:20.400 --> 0:07:23.120 we have that keep us from saving and from just 0:07:23.160 --> 0:07:26.640 like making the obvious right choice. And we're going to 0:07:26.680 --> 0:07:31.040 talk to one of those behavioral economists right now. Our 0:07:31.080 --> 0:07:34.160 guest today is Steve Wendell. He's the head of behavioral 0:07:34.200 --> 0:07:40.240 science at morning Star, which is an invested research firm. 0:07:40.240 --> 0:07:42.840 Why don't you explain to us a little bit about 0:07:42.960 --> 0:07:46.800 what you do and how you study human behavior and 0:07:46.840 --> 0:07:50.840 how you make recommendations based on that. We study the 0:07:50.920 --> 0:07:55.680 gap between intention and action. When people want to save 0:07:55.800 --> 0:07:58.480 for the future and save for retirement or invest in 0:07:58.520 --> 0:08:01.840 a in a thoughtful, diversive wide way, but yet they 0:08:01.880 --> 0:08:05.680 struggle to actually do it. We study why that happens, 0:08:06.040 --> 0:08:10.040 and more importantly, what individuals and their advisors and our 0:08:10.080 --> 0:08:12.600 companies can do to help them do better. And we 0:08:12.680 --> 0:08:18.160 do this primarily through experiments, so formal randomized control trials 0:08:18.160 --> 0:08:21.680 that test if we try talking about retirement savings a 0:08:21.760 --> 0:08:24.840 somewhat different way, does that help people save more and 0:08:24.880 --> 0:08:28.600 really reach their goals? For example? And in general, why 0:08:28.680 --> 0:08:32.880 would you say we make retirement savings decisions, for example, 0:08:32.960 --> 0:08:37.600 that are sort of against our own interests. So when 0:08:37.600 --> 0:08:39.640 I think about saving for the future, I really think 0:08:39.640 --> 0:08:44.079 about four distinct problems that we face. One is our biases, 0:08:44.360 --> 0:08:48.600 right are focused on the present, Our difficulty um planning 0:08:48.600 --> 0:08:52.400 for emergence, for emergency expenses, for regular expenses, etcetera. And 0:08:52.440 --> 0:08:55.439 that's the one. So many people focus on these biases, 0:08:55.559 --> 0:08:58.560 but there's more. The second part, and I think often 0:08:58.600 --> 0:09:03.520 more important, is why we spend, why we find it 0:09:03.559 --> 0:09:07.040 difficult to control our spending and keep on to court budget. 0:09:07.960 --> 0:09:11.600 Third is why we don't always keep the money in 0:09:11.640 --> 0:09:14.240 the plans once we get it there, so why we 0:09:14.280 --> 0:09:17.880 often cash out when there's a job change, especially when 0:09:17.880 --> 0:09:21.560 it's when it's relatively small balance. And fourth, why we 0:09:21.600 --> 0:09:25.119 don't manage the money and our plans very well. Why 0:09:25.520 --> 0:09:28.439 we think, okay, well, I just I'm saving enough that 0:09:28.480 --> 0:09:31.160 should be fine, and then we don't think about, well, 0:09:31.720 --> 0:09:34.200 am I contributing up to the max? And I panicking 0:09:34.280 --> 0:09:37.800 during downturns and pulling the money out, etcetera. So given 0:09:37.880 --> 0:09:41.080 this bias, we have to not think about the future. 0:09:41.160 --> 0:09:43.720 What are some of the common mistakes that people do make. 0:09:44.480 --> 0:09:47.360 The most common mistake, of course, is that is that 0:09:47.440 --> 0:09:49.520 people don't plan for the future at or they don't 0:09:49.520 --> 0:09:52.360 plan for retirement savings, and they don't figure out how 0:09:52.400 --> 0:09:54.720 much they'll need, they don't actually put aside the money 0:09:54.760 --> 0:09:57.679 for it, etcetera. I think that's your first and foremost 0:09:57.760 --> 0:10:00.200 and nuts in our world. We call this the the 0:10:00.200 --> 0:10:03.520 present bias. Our natural focus on the present um, but 0:10:03.559 --> 0:10:05.280 there are many others. There are many others that come 0:10:05.320 --> 0:10:09.320 into play as well. Similarly, we were not great at 0:10:09.880 --> 0:10:14.680 at um at plant and understanding how we're going to 0:10:14.720 --> 0:10:17.320 respond in the future. So we have a we have 0:10:17.360 --> 0:10:20.000 a planning fallacy, and that we think, Okay, I'm going 0:10:20.040 --> 0:10:22.440 to be you know, right now, maybe I'm not ready 0:10:22.480 --> 0:10:25.319 to save for retirement, but next year I'm going to 0:10:25.400 --> 0:10:29.640 be in a great position to do so. Well. Probably not. 0:10:30.400 --> 0:10:32.920 We don't forecast our own future behavior. We haven't forecast 0:10:33.400 --> 0:10:37.280 the state will be in very effectively. So you mentioned 0:10:37.280 --> 0:10:40.120 earlier that your team has done experiments to try to 0:10:40.200 --> 0:10:42.400 test some of your theories and come up with recommendations 0:10:42.440 --> 0:10:44.480 to help people save better. Can you tell me a 0:10:44.520 --> 0:10:48.880 little bit more about some of those studies or experiments. Sure? Sure, 0:10:49.200 --> 0:10:51.800 So we've we were in a variety of different experiments 0:10:51.840 --> 0:10:55.600 to help investors, as I mentioned, close this um gap 0:10:55.679 --> 0:10:58.000 between intention and action. One of the one of the 0:10:58.000 --> 0:11:00.640 simplest ones we've done, for example, in their in the 0:11:00.720 --> 0:11:05.120 retirement space is to show people all the work that's 0:11:05.160 --> 0:11:09.120 involved in calculating this retirement savings so that it isn't 0:11:09.160 --> 0:11:12.199 a proof magic number that comes out and says you 0:11:12.200 --> 0:11:14.920 should save this amount, but give them a sense of 0:11:14.960 --> 0:11:17.640 the of labor in the calculation that's involved behind the scenes, 0:11:17.920 --> 0:11:20.360 and we find that then that that calculation is more 0:11:20.360 --> 0:11:23.200 trustworthy and they say, Okay, there's thought that's been gone 0:11:23.240 --> 0:11:25.360 into that's gone into this, even if it's even its 0:11:25.400 --> 0:11:28.559 computer thinking about it, and therefore let me myself think 0:11:28.600 --> 0:11:31.800 about this more seriously. We did another study actually with 0:11:31.840 --> 0:11:36.440 our own employees, I should say, UM, where we in 0:11:36.520 --> 0:11:40.520 many cases people don't go in and change their contribution 0:11:40.600 --> 0:11:44.880 from the default because they forget because they're doing other things, 0:11:45.480 --> 0:11:48.040 and so we UM we did a reminder that that 0:11:48.360 --> 0:11:51.320 very clearly indicated hey, here's the deadline, here's the here's 0:11:51.360 --> 0:11:53.880 the time required for it, UM. And we found that 0:11:53.880 --> 0:11:57.200 that was that was helpful to UM to get people 0:11:57.200 --> 0:11:59.240 who are in the finance industry and think about this 0:11:59.320 --> 0:12:01.480 all the time, just to spend a moment of time 0:12:01.480 --> 0:12:04.920 to think about their their retirement savings in their own company. 0:12:05.400 --> 0:12:08.440 That's such a small thing that seems to have such 0:12:08.440 --> 0:12:11.840 a huge impact. And also what the Nobel Prize and 0:12:11.880 --> 0:12:16.840 Economics basically was given to for. Are there other small 0:12:16.920 --> 0:12:20.760 things that companies are people can do to check themselves 0:12:20.760 --> 0:12:24.800 into saving better. One, obviously is is on the company side, 0:12:24.800 --> 0:12:28.680 the order enrollment, great technique, very factive, probably the single 0:12:28.720 --> 0:12:31.880 most powerful thing that America has ever done to increase savings. 0:12:33.440 --> 0:12:37.240 We can also very explicitly use mental accounts. So actually, 0:12:37.240 --> 0:12:40.480 what as you mentioned sailor um one of the things 0:12:40.520 --> 0:12:43.680 that that he worked on in that the new that 0:12:43.760 --> 0:12:47.640 the Newel Prize Committee awarded him for in the in 0:12:47.679 --> 0:12:51.720 the newbel for for Economics. So mental accounts is thinking 0:12:51.720 --> 0:12:54.840 about thinking about the money you're saving, not just as 0:12:55.640 --> 0:13:00.640 vaguely for retirement, but rather for specific purposes. This is 0:13:00.679 --> 0:13:03.559 the money I'm going to give to my children, This 0:13:03.640 --> 0:13:05.000 is the money that we're going to live off. This 0:13:05.080 --> 0:13:06.920 is the money that we're going to have that we're 0:13:06.960 --> 0:13:09.440 finally going to check off those items on the bucket list. 0:13:10.040 --> 0:13:12.120 Make it more real, make it more real, make it 0:13:12.160 --> 0:13:14.400 more vivid, give it a purpose. Those are some of 0:13:14.400 --> 0:13:17.240 the many techniques. Let me give you a specific example 0:13:17.280 --> 0:13:19.439 and see what you have to say about it. Recca 0:13:19.520 --> 0:13:22.040 and I both have four O N case from previous 0:13:22.160 --> 0:13:25.200 jobs that we just haven't gotten around to rolling over. 0:13:25.720 --> 0:13:28.360 You're helping me understand kind of why that is we're 0:13:28.400 --> 0:13:31.120 focused on the president, there's no urgency around. It feels 0:13:31.120 --> 0:13:34.480 like too much work. What could we do to kind 0:13:34.480 --> 0:13:36.880 of force ourselves to take the steps we need to 0:13:36.920 --> 0:13:40.960 do this? Obviously good savings decision first, I would say 0:13:41.120 --> 0:13:44.160 if it is a if it's a large balance and 0:13:44.720 --> 0:13:47.240 the plan from the previous employer is a good one, 0:13:48.120 --> 0:13:51.160 we don't always have to roll it over, right. In 0:13:51.240 --> 0:13:54.200 many cases, set it and forget it is a good thing. 0:13:54.840 --> 0:13:57.480 If the money being set aside means hey, you're not 0:13:57.520 --> 0:14:00.199 going to touch it and you're not going to um 0:14:00.520 --> 0:14:02.720 it's it's already past the phase where you might cash 0:14:02.920 --> 0:14:05.240 where you might cash out on a job change. Great, 0:14:05.440 --> 0:14:07.560 But let's say you do want to to roll it over, 0:14:07.600 --> 0:14:11.400 as you mentioned, but you're just not quite getting there right, 0:14:11.520 --> 0:14:13.520 or we have this gap between one's intentions and one 0:14:13.600 --> 0:14:17.600 actions well as as you mentioned before, many of the 0:14:17.640 --> 0:14:21.000 techniques are are just really simple and obvious in hindsight. 0:14:21.800 --> 0:14:24.400 So one thing to do is you set a deadline. 0:14:24.960 --> 0:14:27.400 You say this is the day I'm going to do it. 0:14:27.840 --> 0:14:29.480 I have to do it by this day. You put 0:14:29.520 --> 0:14:32.040 it on the calendar, so you set up a reminder, 0:14:32.160 --> 0:14:34.440 You set up a deadline, and you also do what's 0:14:34.480 --> 0:14:38.119 known as and this is slightly more exotic implementation intentions. 0:14:38.760 --> 0:14:41.280 As you're thinking about it right now and you're saying, ah, 0:14:41.360 --> 0:14:44.640 I wish I would finally get around rolling over this money. 0:14:44.920 --> 0:14:47.400 Take that moment to think through the steps that are 0:14:47.400 --> 0:14:51.720 required to do it. So, Okay, I'm going to have 0:14:51.800 --> 0:14:53.480 to go to this site, I'm gonna have to go 0:14:53.560 --> 0:14:56.800 look up my password. If I don't remember my password, 0:14:57.440 --> 0:14:59.200 or if I can't find my password, I'm going to 0:14:59.480 --> 0:15:02.520 you know, I'll all the company. So it's especially the 0:15:02.560 --> 0:15:05.080 things that might get in your way, like not having 0:15:05.080 --> 0:15:07.280 the password at that moment, those are the ones you 0:15:07.320 --> 0:15:10.320 want to think through beforehand, because what it does is 0:15:10.360 --> 0:15:12.480 in the mind, it creates the script you can go 0:15:12.560 --> 0:15:15.600 off of that. Okay, tell him is hit Now it's 0:15:15.640 --> 0:15:18.040 time to do the rollover. You're just executing these steps 0:15:18.040 --> 0:15:20.360 you've already thought through, and you can't and you don't 0:15:20.400 --> 0:15:23.200 hit a roadblock that says, oh man, I don't know 0:15:23.240 --> 0:15:25.320 the password. Okay, I'll just come back and worry about 0:15:25.360 --> 0:15:28.680 this thing later. So you're mentally working through all those 0:15:28.680 --> 0:15:32.760 obstacles beforehand. I hope that's helpful. Yeah, it feels so 0:15:33.560 --> 0:15:36.560 sort of sad to me that these little roadblocks like 0:15:36.600 --> 0:15:39.000 not remembering a password are enough to keep us from 0:15:39.000 --> 0:15:42.320 making really important investment decisions. But you're absolutely right. It's 0:15:42.400 --> 0:15:47.040 things like that that just block you. Yeah, overwhelming, that's 0:15:47.080 --> 0:15:52.560 that observation is the Nobel Prize. Congrats, fantastic. So often 0:15:52.800 --> 0:15:56.080 we talk about what we can do to remind ourselves 0:15:56.080 --> 0:15:58.360 to say for the future, but then there's the phenomenon 0:15:58.640 --> 0:16:01.680 of freaking out about your savings. Now you're looking at 0:16:01.680 --> 0:16:04.400 the stock market and thinking, oh, like, what's happening to 0:16:04.440 --> 0:16:06.600 my far oh? One K? So what are ways we 0:16:06.640 --> 0:16:09.920 can better set ourselves up to make good decisions in 0:16:09.960 --> 0:16:15.440 those moments? How do people stop from well destroying the 0:16:15.440 --> 0:16:19.800 money that they've They've saved so hard, And the biggest 0:16:19.920 --> 0:16:25.280 lesson is do what you can to not look, to 0:16:25.480 --> 0:16:30.360 not check. Actually, one of one of Richard Sailor's original 0:16:30.400 --> 0:16:33.560 research in this field is on myopic loss version, which 0:16:33.640 --> 0:16:36.920 is the more often that you check your portfolios and 0:16:37.000 --> 0:16:39.760 hinted it with with traders so professionals, even the more 0:16:39.800 --> 0:16:42.880 often you check your portfolios or often you check your investments, 0:16:43.640 --> 0:16:47.600 the more it works your behavior in this case, the 0:16:47.640 --> 0:16:50.080 more it makes you loss a verse in many cases 0:16:50.280 --> 0:16:55.560 more conservative in your trading. And so stay away. Don't 0:16:55.720 --> 0:16:58.320 don't feel that temptation to look, oh, how's my retirem planning, 0:16:58.320 --> 0:17:00.560 how's my retirementlan, how's it doing? All the time, it's 0:17:00.640 --> 0:17:03.560 terrible for you. UM. And you can replace that, right, 0:17:03.560 --> 0:17:05.480 it's it's not just a matter of self control. You 0:17:05.480 --> 0:17:08.560 can replace that with this particular expectation. Okay, I'm going 0:17:08.600 --> 0:17:11.639 to look once a year. I'm gonna look whatever twice 0:17:11.640 --> 0:17:15.879 a year on this date specific and I'm going to 0:17:16.000 --> 0:17:19.280 look at the projection towards my goal, not at the 0:17:19.280 --> 0:17:21.560 price moving up and down, because that is very noisy 0:17:21.600 --> 0:17:25.960 and it's well, it's distracting. Instead, I'm going to look 0:17:26.000 --> 0:17:30.399 at how's the portfolio doing. UM. We find that certain 0:17:30.520 --> 0:17:33.560 vehicles do seem to help people stay on track. More 0:17:34.040 --> 0:17:36.480 so the target date funds that so many people are 0:17:36.520 --> 0:17:41.440 defaulted into now UM. Previous studies have shown that that 0:17:41.840 --> 0:17:44.320 folks were less likely to panic and pull out their 0:17:44.359 --> 0:17:48.920 money during the during the eighth nine UH downturn. UM. 0:17:49.000 --> 0:17:51.520 And and some of that is because people were defaulted in, 0:17:51.920 --> 0:17:54.960 and some of that is because it's this expectation of 0:17:55.000 --> 0:17:56.960 set and forget it it's a vehicle where everything is 0:17:57.000 --> 0:17:59.159 taken care of. You just don't have to worry about it, 0:17:59.200 --> 0:18:01.240 you know, just don't have to watch it. Other techniques 0:18:01.240 --> 0:18:03.680 that you can use to help yourself stay on track 0:18:03.720 --> 0:18:07.720 and not touch that money. One is to really take 0:18:07.760 --> 0:18:15.119 a value center approach that savings. That's vague. Yes we 0:18:15.200 --> 0:18:17.840 know it's important, but it's not really us it's not 0:18:17.920 --> 0:18:23.880 really vivid. Instead, right out, why retire? Why this retirement 0:18:23.920 --> 0:18:27.520 savings matters? Is it about your family? You don't want 0:18:27.520 --> 0:18:29.679 to be a burden on them? Is it because you 0:18:29.720 --> 0:18:31.520 want to give back? You want to give back to 0:18:31.560 --> 0:18:34.240 your community, You want to give back to your society. 0:18:34.280 --> 0:18:37.399 Is it um that you're finally checking off items on 0:18:37.440 --> 0:18:40.360 your bucket list? Is it? Is it um the dreams 0:18:40.400 --> 0:18:44.560 of how you want to uh get these unique experiences 0:18:44.600 --> 0:18:48.400 with your spouse, Write those out, make it vivid, make 0:18:48.400 --> 0:18:51.639 it real, And then when you're tempted, go back and 0:18:51.680 --> 0:18:56.199 look at that description and say, well, do I do 0:18:56.280 --> 0:18:59.520 I really want to give up these things? Are these? Uh? 0:19:00.000 --> 0:19:02.040 These are the things that you know I don't care 0:19:02.040 --> 0:19:05.719 about anymore? Probably not, because these are durable. These are 0:19:05.720 --> 0:19:08.240 the things that these are values and they're much more 0:19:08.280 --> 0:19:10.920 real to us than just I should really be saving 0:19:10.960 --> 0:19:14.560 for retirement. That's really helpful, um, because it's more about 0:19:14.560 --> 0:19:16.800 a frame of mind, I think, than you know, just 0:19:16.840 --> 0:19:18.480 a tip or a trick. And I want to ask 0:19:18.520 --> 0:19:22.960 you as a parting question, um, since most of us 0:19:23.040 --> 0:19:25.320 want to make the right decisions for our retirement, but 0:19:25.480 --> 0:19:29.240 obviously our minds are conspiring against us to keep us 0:19:29.280 --> 0:19:32.479 from doing that. What's like the one most important thing 0:19:32.520 --> 0:19:34.560 to remember, the thing that we should keep top of 0:19:34.640 --> 0:19:37.520 mind as we're trying to, you know, get all these 0:19:37.560 --> 0:19:42.360 little things done. So ironically, I would say the answer is, um, 0:19:42.720 --> 0:19:47.040 don't try to keep it in mind, So automate as 0:19:47.160 --> 0:19:50.720 much as possible, remove yourself from the picture. So make 0:19:50.720 --> 0:19:55.520 a wise decision up front to save in in in 0:19:55.280 --> 0:19:59.440 a in a in a thoughtful, diversified way to save 0:19:59.480 --> 0:20:03.720 and improp it rate, and then play with your kids, 0:20:04.480 --> 0:20:08.680 do your job, do other things. Most people aren't wired 0:20:08.720 --> 0:20:11.600 to think about the future, and especially their financial future 0:20:12.000 --> 0:20:16.200 all the time. We fundamentally aren't going to change human nature, 0:20:16.640 --> 0:20:18.760 look our own or otherwise. I can tell you I've 0:20:18.760 --> 0:20:23.840 tried for myself. Instead, we can change our environment. So 0:20:23.880 --> 0:20:27.640 our decision or once off decision can can pull us 0:20:27.680 --> 0:20:31.600 through this long time between now and retirement, right, we 0:20:31.640 --> 0:20:33.959 can set it and forget it. That I think is 0:20:34.040 --> 0:20:38.600 the one overriding lesson. Yeah, it's like behaviorally easy to spend, 0:20:39.080 --> 0:20:42.520 behaviorally hard to see. Well, thank you so much for 0:20:42.640 --> 0:20:45.000 all your help in thinking through these things. Happy to 0:20:45.160 --> 0:20:46.560 happy to be here, and thanks so much for having 0:20:46.560 --> 0:20:55.919 me on the show. H m hmm. I don't know 0:20:55.960 --> 0:20:58.720 about you, but I feel a little bit better now 0:20:58.760 --> 0:21:01.680 about being such an dump me about investing in savings, 0:21:01.760 --> 0:21:04.719 because I feel like that's how we're wired. It's not 0:21:04.800 --> 0:21:07.040 my fault. It's just human nature. We're all like this. 0:21:07.359 --> 0:21:10.479 It's not only that he told us that people are 0:21:10.520 --> 0:21:12.760 wired to be dummies. He was like, be a dummy, 0:21:13.080 --> 0:21:17.080 like set up the alerts. Yeah, do your thing, don't 0:21:17.119 --> 0:21:19.919 think about it too much. Um. Yeah. With regards to 0:21:20.280 --> 0:21:23.080 rolling over our for Owen care, are you gonna take 0:21:23.119 --> 0:21:26.080 his recommendation, Well, apparently I don't even have to, which 0:21:26.080 --> 0:21:30.160 brings up or I don't necessarily have to, um, which 0:21:30.240 --> 0:21:32.439 is another kind of interesting thing to think about. You 0:21:32.520 --> 0:21:35.040 and I talked about this before the show. We're like, oh, 0:21:35.240 --> 0:21:37.200 we're four one please, We're so dumb. That we haven't 0:21:37.280 --> 0:21:40.040 rolled them over, and we both just assumed that the 0:21:41.200 --> 0:21:44.439