Investor Minute
More than Money: How Four Key Traits Enable Retirement Success
Have you ever been talked into participating in an “adventure” that turned out to be a lot harder than you were led to believe?
Maybe a friend convinced you to run a half marathon with them, or tag along for a 60-mile bike ride. “It won’t be that hard,” they promise. And even after you protest that you’re not really in shape for something that challenging, they say, “Oh, you’ll be fine.”
Well, even if this hasn’t been your experience, you can guess that trying to run 13.1 miles or pedal briskly for five hours without weeks of preparation will probably end in failure.
The point is not that these are impossible feats for the average person. Completing them successfully requires planning well ahead of time, scheduled training, and the determination not to quit when the going gets tough.
It’s your expectations and attitude that make the difference not necessarily physical prowess.
The same principle applies to saving for retirement. It’s not always easy. And your mental outlook plays a large role in your ultimate level of success.
This concept was borne out in a recent study. Behavioral finance research firm Syntoniq teamed up with Goldman Sachs Asset Management to identify the kinds of personality traits that are found in people who successfully save for retirement.
In their study they found four:
Overoptimism. Maintaining positive expectations even when current circumstances don’t always warrant it.
Future orientation. Realizing that there’s a direct connection between what you do now and how you will experience life in the future.
Financial literacy. Having a basic understanding of concepts such as compounding interest, compounded returns, and diversification.
Risk vs. Reward. Being willing to take an appropriate current risk in pursuit of a specific future reward. (This is in contrast to prioritizing safety and security above all else.)
According to Chris Cedar, who worked on the study for Goldman Sachs, the two most important traits of the four were optimism and future orientation.
While the study found that a relatively small number of people possess all four traits, it is possible for anyone to cultivate these attitudes. For example, you don’t have to feel optimistic about your finances every day if you establish practices and actions that are generally driven by optimistic assumptions.
Successfully saving for retirement is a challenge. If it were easy, nobody would need fiscal discipline and professional help.
The good news is that it is achievable. And your trusted advisor can guide you along your long-term plan, while holding you accountable to reach your goal. Make an appointment for a free call with me by clicking this link.