• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>Why Is Saving for Retirement So Hard?

Related Content

  1. Videos
  2. Articles
  1. Special Report: Investing in a Volatile World

    Morningstar's top strategists discuss their tips for investing in a rising-rate environment, where equity values lie, and some of their favorite investment ideas right now in this special midyear roundtable.

  2. Johnson: Softer 1Q Doesn't Change My View

    Although the third read on first-quarter GDP came in lighter than expected, Morningstar's Bob Johnson is sticking with 2%-2.25% full-year GDP estimate.

  3. Second Quarter in Bonds: A Damage Check

    Many managers are of the mind that rates have gone about as far as they're going to go for a while, so investors probably don't want to exit the bond market while their funds are down, reports Morningstar's Eric Jacobson. Plus, get an update on fund category performance in the second quarter as well as updates on fund leaders and laggards, including PIMCO Total Return.

  4. New T. Rowe Target-Date Series Aims for Less Volatility

    T. Rowe's new target-date strategy differs from its flagship product by providing a lower equity allocation at retirement time and creating more predictability of returns, says manager Jerome Clark.

Why Is Saving for Retirement So Hard?

It's difficult for the human mind to compute the benefits of saving for tomorrow versus consuming today.

Michael M. Pompian, 07/23/2015

This month's article is the sixth in a series called "Behavioral Finance and Retirement," which is intended to provide insight to advisors on the unique needs and financial behaviors of clients who are entering that period of transition called "retirement."

I put retirement in quotation marks because people today are not retiring the way they used to. The days of the retirement party, the gold watch, and sitting out one's years doing crossword puzzles and watching "Wheel of Fortune" are over for most people.

We've all heard the analogy that the baby boomers are like a baseball going through a garden hose. Well, the baseball is getting to the end of the hose, and it's not leaving without a bang! And before it leaves, it will be a financial force to be reckoned with.

To serve retired clients properly, there are some key themes that advisors need to be aware of:

1. People are living longer than ever thanks in part to medical technology and better living habits such as diet and exercise. This is extending the length of time people are in a nonworking phase of life.

2. People's definition of retirement is changing, which is having a major impact on how individuals manage their finances.

3. In some cases, a certain segment of the population will have no choice but to produce some type of income after they leave the traditional workforce.

4. The responsibility of planning and investing for retirement has shifted in large part to the employee/retiree and away from corporations. As a result, behavioral biases significantly affect individuals who are entering or already in this phase of life.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.