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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Don’t worry if you come across as a bit harsh. A lot of times the company provided enough information in printed materials that us employees should have known to ask more questions. At age 55, I really didn’t understand how Medicare worked. I spent about 6 months figuring it out. YouTube has a lot of good videos that help you ask the right questions. I’ll know if I did a good job in another 4 years. But making a Medicare choice is not something to wait to do after you turn 65. It is too important to wait until the last minute to figure out. It also comes with lifetime penalties if you do not sign up in time.
But as far as being a bit harsh. No, Dave Ramsey is harsh or as I like to call it tough love (not that I always agree with him). Sometimes you have to call it as you see it. You can take a horse to water but can’t make them drink. Anyone who doesn’t take advantage of an employer match on a 401K is, well stupid and that is not harsh.
While I have nothing close to that wide array of knowledge, I’m still “smarter than the average bear” on this stuff, and here’s the one that most frequently triggers a “fuhgetaboutit” from me.
From Jonathan Clements response to a “What financial advice would you give to those in their early 20s?” feature on this site:
‘I’d probably start with two key phrases: “Keep it simple” and “keep your confidence in check.” It’s all too easy to assume we know where markets are headed, which investments will outperform, what we want from our financial life and what the future holds for us.’
It’s remarkable how often I encounter people of all ages who know nothing about personal finance, and yet have total confidence regarding the underlined bits above. Veritable swamis, they are. <rolleyes>
I think a key component of a financial education when that is not your forte or profession is to know enough to ask good questions to an expert. I don’t think Dick is saying that you have to be that expert. You have a personal responsibility to you and your family. If you don’t, then you risk financial insecurity due to decisions you didn’t make, decisions you made, and decisions that were made for you. You can make up excuses from no interest to no comprehension, but, in the end, no one else but you must pay your debts.
Good summary of the situation. Seek and ye shall find.
People will spend all sorts of time on their phones but don’t have the time to think and learn about their finances.
Thanks for trying to help so many people! I’ve learned the hard way that you can’t help those who won’t help themselves. Sounds harsh, but that’s been my experience.
Understand your point but money management simply doesn’t float some people’s boats. They don’t realize wealth buys freedom and the math likely bores them.
You’re right of course, but is that a valid excuse? The result can be a poor financial future which I guess some people can’t see or don’t want to deal with.
I think you are right in some ways, but are missing some important points. I was in the financial services industry for over 30 years before retiring. Totally changed careers, and it took a lot of time and effort to understand the finance and investing world.
What I am now aware of, after talking with so many, including friends and my own kids, is that the average person does not understand investing for many reasons. It is its own language. To you it is common sense and something that just requires not ‘being lazy’. Sorry, but it is more than that.
Think of it this way. What if someone who is well versed in another field, medicine, law, science or whatever, suggests you should do some reading and become competent in their field. They could say the same thing about you and me if we didn’t want to put in that effort because it seemed so foreign..
Most people are busy in their own fields and jobs, raising kids, dealing with personal or health problems, to deep deeply into something they have no knowledge of. That’s a big reason there are so many financial firms and advisors out there. Just because information and material is offered does not mean everyone can or will put the effort in. It is not always laziness. It is lack of understanding, even if they did read all the material.
One can set up their own wills and trusts now online, but law firms abound. Why? Because it is a different language, and with some readings and effort COULD be handled if the effort was made.
Because of your years of experience, you think it is easy like painting by numbers. To me it is the same, yet when I have had discussions and explained mutual funds, ETFs, etc., many do not full understand.
I worked with high net worth clients, most of whom were very intelligent. Yet they were ignorant in our field. For example, I cannot tell you how many times, when I asked them about their investments, they thought a 401k and an IRA WAS an investment. They didn’t understand it was just the vehicle holding their investments.
So, I do not think laziness is the reason for all. Maybe it is for some.
I’m sure you are right, but as I say, lazy thinkers. I have no doubt the people in the examples you give have the ability to understand the basics, stick to simple forms of investing and simply save. And I guarantee those folks with a 401k had info readily available that explained the plan.
It’s not a question of what they know and don’t know, for me it’s a question of why.
I would be interested in your opinion why people do not take the time to understand what is in their best interest.
My undergrad engineering degree included several required courses in various disciplines like materials science, four levels of calculus/math, electronic circuits and statistics/probability, among others. For the most part I enjoyed the heck out learning a bit about these disciplines which were otherwise not central to my chosen field.
Even though I was good at math and loved calculus, and aced most of the required outside elective courses, I nearly failed statistics and was put on academic probation until I took a second course in it and passed with at least a C grade. Which I just barely managed to do.
So why was it that I simply couldn’t crack stats? Was it because I didn’t have the correct information presented to me? I don’t think so – there were other students in my class (and discipline) who aced it.
Was due to lazy thinking? Well…I guess maybe it could’ve been. OTOH, it sure didn’t feel like laziness to me when I was attending 1:1 office hour sessions with the TA for the course, who was doing his best to help me grasp the mysteries of the Student T distribution.
I just put it down to wiring – my brain wiring, that is. I just wasn’t cognitively equipped, it seemed, to absorb the concepts and thought processes required to get a good feel for doing statistics work. I wish I could’ve. I certainly was motivated to learn it, lest I be forced to transfer out of the engineering school.
The point is, everyone’s wired differently. Sure, some people are smart enough to learn personal finance and for whatever reason just don’t. But I would bet the majority of people aren’t; and no matter how much effort they put into it, it will never completely make sense to them. Which is what I got from reading @Boomerst3’s comment.
I couldn’t deal with calculus or statistics in college or anything but basic math for that matter. I guess I’m not wired and I surely don’t have the patience. But nothing I am referring to comes close to that comparison.
As I acknowledged, some people simply are unable to cope with much of life’s issues and need direct assistance, but that is not the problem with the vast majority.
In addition, the ability to get understandable information for the average person is nearly unlimited no matter how a person learns best.
We are not talking about anything that requires unique skills or detailed knowledge, just a bit of initiative and time .. and desire.
Not sure what it’s like now, but every one of my past 4 employers back in the day were so scared of getting sued, explanations or help of any kind was minimal for 401k participants.
They wouldn’t help employees understand fund choices; give any guidance on choosing funds, prudent investment practices, etc. It was basically: “here’s your 401k…you’re on your own.”
Every collateral piece urged joining; listed the overpriced funds (no expense ratios revealed back then – all secret squirrel stuff); with prominent warnings on every piece: “<employer name> cannot provide any guidance or advice on how to save or invest. Consult your financial specialist” or something similar.
Most employees overwhelmed by all the choices stuck their money in a MM and called it a day. At least they saved something.
I don’t resent lazy thinking nearly as much as people who love playing entitled victim – constantly pointing fault at everyone else for mistakes they made and/or insisting the world “owes” them free this, forgiveness that, etc.
“We’re all ignorant – just in different subjects.”
– Mark Twain
Yes, there is a lot of information out there on all things investing. And a lot of it is conflicting. For instance, when I sign up for my employer’s 401k plan (did I have a choice?? I’ve heard some employers now use autoenroll for all their employees), what funds should I choose? The ones with the best five-year return? The one that tracks the S&P500? A TDF for someone my age? Two equity market trackers (a domestic and an international/emerging) and
one core bond fund? How much of each? What’s an asset allocation? Oh – they charge me money to invest in these? How much? Is it worth it?
Now, what was that you were saying about putting your hard-earned money into a 401k being a no-brained?
As for your comment about the majority of people who get themselves into financial difficulty being lazy thinkers, you may want to rethink that a bit, and maybe rephrase it.
Maybe what you meant to say is the majority of people you counseled got themselves into financial difficulties because…because of what, exactly? Because you could see clearly the errors they made that they themselves were not aware were errors when they made them?
That ignorance thing, Dick, is important. Not everyone you meet has spent the last 50 years learning about this stuff, much less teaching others about it. And statistically speaking, you haven’t met with the majority of people in the world, or even the United States, who are experiencing financial difficulties. You might want to think about that the next time you make a gross generalization like that without providing any empirical research to back it up, because someone may read this blog who really did end up where they are despite exercising good financial judgement along the way.
Being curmudgeonly, btw, is an example of lazy thinking. It’s really easy to go negative early, to judge others without fully understanding their entire situation and life history. It requires empathy and emotional investment to learn about someone’s story and to understand (that’s a huge word) how they came to make the choices they’ve made thus far.
One thing I’ve learned for sure is that the choices people make made sense to them at the time. But you do have to invest a bit of effort sometimes to understand how they got to where they did.
Good example. The fact is a 401k is retirement plan, only a retirement plan so it’s long term, in some cases years after retirement. The choice is simple in most cases with no need to overthink it. In a word index fund(s) or a target date fund. Yes, some plans have too many choices, but getting some basic info on long term investing is pretty easy. Plus the plan administrator likely has info available in all but the very small employer plans.
As a famous coach used to say to her players, “suck it up buttercup.” When you’ve seen it all and done it all, it’s called wisdom; the truth always prevails.
To quote a patient of mine with one of his favorites: “You can lead a horse to water BUT a pencil must be lead”.
In general, I agree with this article, but I disagree all people who don’t do things the Humble Dollar way are lazy thinkers. People have different priorities and attitudes. Some may embrace debt to have things or experiences now. Some may have dysfunctional attitudes towards planning that defy any mitigation by thinking. Many can’t save or invest due to issues such as low pay and high rents or unexpected medical debt.
Also, deciphering medical insurance is not easy. One of my kid’s first assignmnents in med school (she was home during first semester due to covid shutdown) was all about medical insurance. We looked at plans from different states. It was an opaque mess where the patient was not the priority. We got another look at this trying to buy health insurance in MA. And now in FL which isn’t allowing us to buy a new plan until the old one expires, which is a potential recipe for disaster. Where is the lazy thinking here? The gov’t that allows such a rapacious system to remain in place.
Dick, you do realize that almost by definition, not a single person reading this article on Humble Dollar is a lazy thinker, right? But I thank you nevertheless. Now when I encounter one of these lazy thinkers, I don’t need to be the curmudgeon. I can just hand them this article! 😉
Good point, let’s hope so. But let’s hope too there is a tiny bit of missing information otherwise what will we have to write about😎
Based on your personal experience, you seem to imply that only a “tiny percentage of workers” take advantage of 401(k) plans. However, according to BLS data:
In March 2021, 68 percent of private industry workers had access to retirement benefits through their employer, with 51 percent choosing to participate. Ninety-two percent of workers in state and local government had access to retirement benefits, with 82 percent participation. The take-up rate—the share of workers with access who participate in the plan—was 75 percent for private industry workers and 89 percent for state and local government workers.
A study in the 90s by the Federal Reserve found that participation was significantly lower for those with lower incomes and that those with lower incomes who took distributions before retirement were much less likely to roll them over. I hope you don’t consider lower-income workers to be more likely to be lazy thinkers.
I said a tiny percentage took advantage of the educational seminars about their 401k and retirement plans, not that a tiny percentage used the 401k. In fact, before auto enrollment we had participation in the 80% range, but then the issue was investment choices, misuse of loans, etc.
Fidelity has all this information about each fund. But I don’t know what it means and how to use that information in choosing a fund other than a target date fund. I think it’s hard to explain what I don’t know and you might not understand what I don’t know because all of this is easy for you.
And it was FAR worse for 401k participants back in the ’80s/’90s. Target funds didn’t exist. We could choose from money market, bond and equity, the latter in medium risk or very aggressive risk. No index funds. All managed funds at very high cost, I’m sure.
At that time, there was no rule requiring the folks running these plans to disclose expense ratios. I tried asking twice and was shut down abruptly – treated very condescendingly, as if I was a moron for asking.
Wise observations and guidance, as usual. Think for yourself, take responsibility for yourself –those are really the keys, aren’t they? Clearly something is not working on several fronts. I go back to Jonathan’s April 22 piece on takeaways from the new book:
“1. Our parents mold our financial beliefs. This comes shining through in almost every essay. Trust me: If you’re a parent, it’s scary to realize how much influence you have on your children. Really scary. What beliefs from our parents should we hang on to, and which should we discard? For some contributors to My Money Journey, it’s been a lifelong struggle.”
The problem is getting the key themes to resonate with parents who themselves haven’t had those themes emphasized in their lives. How to fix that?.
I admit to hitting “red thumbing” your comments on occasion. (It doesn’t matter; the green thumbs overwhelm.) Why? Not because I disagree with you. I think you’re spot on nine times out of ten. But I think you take the curmudgeon schtick too far sometimes. Too often it’s “younger generations” this or “young people” that. (To be fair, you bang on 50 and 60-somethings occasionally, too). Your common themes are universal, applicable and important to people of all ages. Painting those themes with a generational brush pushes away the people who need your message the most. And why the “shouting” in your comments? You don’t use ALL CAPS in your posted pieces. Your takes are insightful and cogent and you write well. Speaking directly, as you do, is much needed today. But direct speaking doesn’t require the “get off my lawn” stuff. That said, I still read you and learn from you just about every time. I guess that’s what counts.
Okay, bring on the red thumbs.
It is rare my thinking and worldview is not impacted by a Dick Quinn column. So, thank you.
My experience suggests so many of our reactions are dictated by our personalities, the core of what makes each of us unique. Some view directness as an attack or hostility, while others see straightforwardness or plain talk. Most us recognize our success in life involves quality communication. Part of this acknowledgment ought to be respect, or at least, tolerance for diversity. Nothing excuses shaming or personal attacks.
I venture to guess financial professionals, educators and health care professionals might agree scolding gets terrible results. To this HD reader, Dick’s commentary contains little of the latter. He certainly repeats and admonishes on topics he feels strongly but I’m not certain the courage of convictions is a bad thing.
In our hyper-partisan world, too many issues are now primarily viewed through tribal allegiances. I appreciate the HD community has mostly avoided being mired in such malaise.
Dick – please keep being you as many of us benefit immensely from your contributions.
Thank you. I suspect I have no choice at this stage of life except to continue as me. My wife has tolerated me for nearly 55 years, so I guess there is hope.
I agree that people should take responsibility for their own financial lives and should pay attention to the information they receive.
However, it’s also fair to note that information has become exponentially more complex to access and to correctly process. This is especially true in the case of anyone who is old enough to predate personal computers, the Internet, and smart phones.
In the example you gave about Social Security, I remember not so long ago we would all get an annual statement a couple months before our birthdays, a hard copy that came in the mail. Now they don’t do that anymore and you have to sign up for an online account and remember how to log in if you want the information. Impossible to do? No, of course not. But it adds another layer of complexity. I have older relatives who fundamentally do not trust anything about the Internet, and these days you can’t run a financial life without it.
In a little under two years from now, my husband and I will have to make decisions when we apply for Medicare. I find the options rather overwhelming, and I don’t entirely understand how it will synch up with the retiree health care we now receive from my husband’s former employer. I’ve read stuff and even attended a Zoom webinar about it, and I still don’t quite get it all. I’ll figure it out before we’re 65, but it’s not that easy. And I’m a well educated person and trying to understand.
I agree that some people don’t even try and deserve criticism for that. But life is complicated and the amount of information bombarding people is distracting. As a teacher, I’ve learned I have to present information several different ways and at different times. Even then, I still have to take a deep breath and be patient when a student asks a question I’ve already answered multiple times—or worse, accuses ME of being unclear or disorganized when I’ve done my level best to make important information salient and accessible. The human brain is overloaded these days.
I agree. I’m also a well educated person and I consider myself pretty well-informed on financial matters, but I know I probably give it more time than most because I find it interesting, not just a necessity.
Yes, there’s a lot of information out there that’s easy to access for most. But I’m not sure it’s easily understood by those who can access it. Also, in addition to the easily accessed information is a lot of misinformation, so one must not just understand the information they access, but also know what’s wrong or at least not right for them.
It’s true that many don’t really try to understand, but I don’t think it’s a simple matter of “just doing it.”
Things are complicated. In some ways more than necessary, but the ability to gain information has been enhanced. When I first started communicating about benefits we were basically limited to print material and meetings. Now not only the internet, but YouTube explains all kinds of issues, including SS and Medicare.
The Medicare site gives very good info about the choices – which are basically Medigap or Medicare Advantage as supplemental coverage. Once retired on Medicare an employer can provide supplemental coverage, but not likely. That should be explained in the employers summary plan description.
The most difficult decision and arguably the most unnecessarily complex is choosing Part D prescription coverage. That really takes homework and a bit of good luck.
To my point above, there’s a lot of junk on YouTube too. Not so easy for the average Joe or Jane to separate the wheat from the chaff.
This follows up on your comments above from a recent Kiplinger’s article that mentions some questionable places to receive “quality” financial advice – TikTok, Instagram and Facebook – https://www.kiplinger.com/personal-finance/financial-literacy-gen-z-taps-tiktok-for-financial-advice A short interesting read.
I think we underestimate Joe and Jane. That reminds me of my early years in labor negotiations when some people in management called union workers “Joe six pack” in a derogatory manner. The reality was those workers were no less savvy, sometimes more so than management when it came to their financial benefits.
The boring stuff like healthcare, planning for retirement, Social Security, investing – stuff 100% in a persons best interest just seems to come second to other things vying for their attention and most people could change that.
Being retired with time on my hands and writing on HD and my blog, I do have interest in those topics and the info available on YouTube related to all those items is very good.
Some info is so easy to access you can just talk to Siri and your Google home speaker – I just tried it.
Too much credibility has been given to those that blame systemic inequality. Personal accountability has to count for something.
The articles which draw the largest number of likes or comments are not necessarily the most interesting or useful, at least to me. I enjoy reading the comments on articles, many of which draw a number of “likes” or “dislikes” themselves. An infrequent provocative comment will predictably draw several down votes. Most other comments which draw down votes, if not accompanied by an explanatory note, leave me to wonder whether they disagree with the content, or are they just “shooting the messenger”?
I wish I knew how to solve the issues you discuss regarding coaxing employees, or even people in general, to make financial decisions in their own best interest. The behavioral economics literature discusses such concepts as “nudging” and so called “opt-in” versus “opt-out” to help people overcome their inertia. Maybe the psychologists on Humble Dollar will comment on this.
I enjoy all your articles, even if I don’t always agree with every point made. Keep them coming Dick!
Excellent observations and thank you
Well, everyone wonders why there is so much economic inequality – well, this is why.
Of course, if everyone were economically prudent, there would be fewer opportunities to become wealthy.
It sure doesn’t help especially when the goal should be to help raise up the bottom rather than tear down the top.
Power corrupts and extreme inequality is a form of power for the rich. It means they can commit crimes with impunity – dumping toxic waste on the poor, recklessly speculating and getting bailouts, etc. etc. etc.
The rich continue to use their power to redistribute wealth upwards – hedge fund billionaires pay a lower tax rate than a firefighter for instance.
So it is difficult to see how to “raise up the bottom” without checking the extreme power of the rich.
Excellent article. Prior to retirement, I was on the 401K committee at my last corporate job. I used to get similarly frustrated with coworkers, who didn’t take the time to understand their options or didn’t want to take the time to understand, no matter how many times I explained things like the company match. Many of these folks were in their 30s and 40s, making a decent salary. It was astonishing
The worst part is for those who eventually get it, their ah-ha moment includes the dreadful realization the greatest ally (time, compounding) is gone forever. Though it’s certainly never to late to start.