F. Scott Fitzgerald, author of The Great Gatsby, wrote, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” 1
Others might label that process cognitive dissonance.2
But for the sake of argument, let’s stick with Fitzgerald’s assertion. Because according to his definition, 75% of Americans are of “first-rate” intelligence—at least when it comes to thinking about their retirement.
A survey conducted by CNBC and Acorn found that 57% of respondents are more confident now about saving for retirement than they were three years ago. Yet 75% of them are managing their finances with no professional help. When you subtract self-service investing sites, that number goes up to 83%.3
In other words, they have every hope and intention of one day quitting work and living off their investments and Social Security. But they have not sought guidance from an expert to understand specifically how they’ll achieve their intention.
Among other things, this means that the majority of people are probably missing the cornerstone of any retirement investing plan: the target amount they need to have saved to be able to quit working. In other words, cash flow is king.
Evidence of this knowledge deficit is borne out in a report by the Transamerica Center for Retirement Studies, which found that 40% of workers who provided an estimate of their retirement savings said that they “guessed” the amount they needed. But even those who “figured out” their goal amount are likely to have an inaccurate result if their numbers were not reviewed by a financial professional.
The prevailing mindset seems to be that things will somehow turn out fine on their own. But the reality is that things are not turning out fine for the record number of Baby Boomers who have hit retirement age and still have to work to support their cash flow needs.4
However, there is a group who not only sees the importance of a financial plan, but recognizes its value even before they have the income to fully fund it. According to The Street, tech savvy young professionals view having a retirement roadmap as analogous to their goals for wellness in other areas of life. Financial professionals have observed that just as their younger clients recognize that adequate sleep, good nutrition, and exercise are all part of a healthy life, so is having an overall plan for their finances. “These are prospects who may not have enough assets to become investment clients but who need–and value–sound financial guidance.”5
What you can accomplish when you begin with a plan is amazing. It ensures that your efforts are consistently in the same direction, so that over the long term they can add up to success. Having a plan can also help you be better positioned to navigate life’s unexpected financial events with greater clarity about how they’ll affect your intended outcomes.
Your trusted financial advisor has the training and experience necessary to help you create a plan based on your unique situation and designed to endure the ups and downs that will always be part of investing in global free markets.
Citations:
1 – https://www.brainyquote.com/quotes/f_scott_fitzgerald_100572
2 – https://www.psychologytoday.com/us/basics/cognitive-dissonance
3 – https://www.cnbc.com/2019/04/01/when-it-comes-to-their-financial-future-most-americans-are-winging-it.html
4 – https://qz.com/work/1632602/the-number-of-americans-working-in-their-70s-is-skyrocketing/
5 – https://www.thestreet.com/personal-finance/financial-planners-see-growing-demand-from-younger-prospects-14772572
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