Think for Yourself

I DREAD THOSE RED down votes on my HumbleDollar comments. Perhaps at times I come across as less than empathetic, but that’s not really me. I have sincere empathy for anyone who honestly struggles to make life decisions, including financial decisions. I also realize that adhering to good financial practices is made hard by the problems that arise with the ups and downs of daily life.

I spent my working life, which spanned nearly 50 years, trying to educate workers about 401(k) plans, health plans, life insurance and more. Thirteen years after retiring as a corporate executive overseeing compensation and employee benefits, I still get messages from folks who retired from my old employer—and even from their spouses—asking for help. Whenever possible, I happily provide answers.

Yet the majority of people who get themselves into financial difficulty are what I call lazy thinkers. These are people who have the ability and resources to make good decisions but go through life unaware. They display a “don’t care” attitude, ignoring the possible consequences of their actions.

During my career, when I met with employees, I could usually tell if their need for help was sincere. Too often, they misrepresented the facts, left out important information or hadn’t made an effort to solve their problem. I’ve heard that at times I come across as a bit harsh. Perhaps my work experiences have tainted my perception, but I have little tolerance for lazy thinkers. They bring out the curmudgeon in me.

Consider the 55-year-old who says he can’t plan his retirement because he has no idea what his Social Security benefits will be. Hey fella, to get an estimate, try one of the Social Security Administration calculators. It’s easy.

I just read this question on Facebook: “I’m looking to start a Roth IRA with Fidelity. Is there a good ‘on-ramp’ when initially investing with Fidelity?” Yeah, go to Fidelity.com and click on “Open an Account.”

Which health plan is the best deal? There are four factors: premiums, deductibles, co-insurance and the out-of-pocket maximum. While predicting your exact medical spending for next year isn’t possible, your payment history—especially if you have a chronic condition—provides a reasonable guide.

Absent that research, folks can determine the maximum out-of-pocket amount they’re able to pay and compare policy premiums, and then decide accordingly. Ignoring annual open enrollment information, as too many Americans do, makes good decisions nearly impossible.

Should I contribute to my employer’s 401(k)? Is that really a hard decision, especially when there’s an employer match? I recall a group of workers who wouldn’t participate. They didn’t trust the company and didn’t want the employer to have their money. Some didn’t know there was an employer contribution. Not really thinkers at all.

Participating in the 401(k) should be a no-brainer. To help workers decide, my employer—and many others—provided extensive communications and online tools. We held seminars that we invited workers and spouses to attend. A tiny percentage of workers took advantage. Most weren’t willing to invest the time. Even the unions were frustrated with their members ignoring these opportunities.

I recently viewed an old video criticizing 401(k) plans, saying they’re too confusing, workers don’t understand mutual funds or their fees, and so on. Of course, the larger world of investing is complicated, too, but a minimal investment of time will provide the basic information needed to use a 401(k).

Similarly, ignoring your employer’s flexible spending account or health savings account is often a poor financial decision. The unrealistic fear of losing money was frequently the excuse, but simple planning can easily avoid that—if you think about it.

Two years ago, my former employer dropped Medicare-eligible retiree health coverage and replaced it with an annual lump-sum payment, which could be used to buy coverage through a designated administrator.

Communications went on for nearly a year. In addition to printed materials, there were videos to watch. COVID-19 prevented the planned in-person meetings. Still, reading the materials would have made the transition relatively easy for those affected, and a comparison with the old coverage showed the vast majority of retirees were getting a better deal. I saved $3,400 annually in out-of-pocket costs.

Nevertheless, mass confusion and misinformation reigned among retirees. Many made poor choices. Part of the problem was that retirees didn’t know what their old coverage was or what they paid for it.

One fellow absorbed all the misinformation—and ended up not enrolling his wife in the plan, but instead bought Medigap coverage on his own. That meant he lost $4,500 annually in employer contributions.

So, why this rant? I get frustrated when I read about the financial issues that many folks face and which are so often of their own making. In fact, after nearly 50 years of trying, my inability to get more employees to pay attention to their own financial lives was a factor in my retirement. My job was frustrating.

Yes, more financial education, starting in grade school, is important, at least as important as learning basic arithmetic. But you can lead a horse to water and all that.

My message? Pay attention to the information you receive, ask questions, investigate, use every resource available—and don’t believe every rumor you hear. Take the time and put in the effort needed to make good decisions. As my chapter in the just-published book My Money Journey concludes, “We can’t control what others do and we can’t stop misfortune from striking. But we can control our own actions.”

Richard Quinn blogs at QuinnsCommentary.net. Before retiring in 2010, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.

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