With the introduction of the concept of anchoring, Tversky and Kahneman opened the door to a new way of thinking about and addressing the financial decision-making process. For more than four decades, subsequent research has expanded upon their idea. Yet, plan sponsors and participants continue to remain uninformed of the dangers of anchoring.
Education
With a GOT-based strategy, expectations are predicated on needs, not the happenstance of the market. GOT-based portfolios may not have the record-breaking excitement of market indices, but itâs slow-and-steady-wins-the-race philosophy may lead to a more comfortable retirement.
In retirement planning, there can never be any guarantees. Thatâs why itâs critical that these tools are used continually and consistently. A magician never gives the audienceâs eyes a chance to wander.
Never belittle the question or the person asking the question. These are sincere queries that represent commonly held beliefs. These beliefs live a Schrodinger Cat-like existence, being generally not quite true and not quite false. Itâs critical, for the benefit of all retirement savers, that these questions be asked and that fiduciaries encourage their asking. This is the only way that allows the fiduciary to respond in the second noteworthy way: By using these questions to refute misconceptions and promote good retirement saving decision-making.
In this retirement plan version of the game âWho Killed Cock Robin?â we can identify three macroeconomic trends that slayed the pension plan, once the giant among all retirement plans. But, where does the 401k fit in?
Despite those imagined rosy memories, actual history shows, with a few notable exceptions, pensions were never as universal or as lucrative as imagined.
The traditional lifestyle arc, along with the traditional career arc, may push millennials away from Roth style savings later in life.