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Generational Perspective
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AUTHOR: Rand Spero on 5/8/2025
FIRST: bbbobbins on 5/8 | RECENT: DAN SMITH on 5/15
“IT DOESN’T MATTER IF our planned trips might jeopardize our retirement savings.” The word “jeopardize” was spoken with a sarcastic tone.
It was clear my two financial-planning clients didn’t appreciate my message. They were adamant. Their 10 pricey National Geographic trips, which would span the globe, must remain on their bucket list.
So began a challenging chat. Based on their excitement about their retirement wish list, it would have been easier to simply applaud their exotic plans.
ARE THERE TIMES when we waste too much energy in pursuit of a good deal? I have clients who get so caught up in proving they’re smart consumers that they can neglect their own needs.
One client runs a successful business. She’s saved more than enough to retire early, should that become her goal. She’s an outstanding negotiator. The problem is, her diligence can sometimes cause her stress.
She and her husband have young kids.
WHY DON’T WE SPEND our time and energy on financial issues that have the greatest impact? We’ll drive to a more distant gas station to save 10 cents a gallon, but fail to do all the maintenance needed to extend the life of our car. What lies behind this sort of behavior? The savings from getting the best price per gallon is concrete and immediate, while maintaining our car is long term and abstract.
GIVING GIFTS DELIVERS significant emotional and health benefits, or so says the research. But I find much depends on how the actual giving takes place.
My best giving lesson occurred many years ago. At a rural busstop on the island of Crete, off the coast of Greece, I sat next to an old local woman dressed in ragged clothing and torn shoes. Neither of us spoke the other’s language. She carried with her a small bag of fresh peaches and motioned for me to take one.
WE’RE FASCINATED by the recent college admissions scandal—and the wealthy parents and celebrities who were arrested. This drama has all the elements of a reality television show. The parents, who get starring roles as villains with no moral compass, scheme to ensure their children gain admission to sought-after colleges.
The lively plot doesn’t bother with common concerns, such as how to afford the high cost of college tuition, which continues to rise much faster than inflation.
A NEIGHBOR COMPLAINED to me that his car insurance rates soared after a fender bender. I assumed that he or his wife were involved. But it turned out he was referring to his daughter’s accident. Even though she was 27 years old and had a good paying job, he continued to assume financial responsibility for her car. Is this smart parenting—or does it stymie our children’s transformation into well-rounded adults?
When my friends and I graduated college,
MY ELDERLY MOTHER’S credit card was recently compromised. This required her to move all her automatic payments to a new credit card.
That, in turn, prompted her to reevaluate these various charges. Her cable bill, for instance, had gone up more than 15% over the past two years. My mother complained that, while she gets many channels, she only watches broadcast TV. She dropped the cable package.
As she added the autopay information to her new credit card,
OUR EGOS CAN TORPEDO our investment decisions. Here are four examples, plus some suggestions for how to avoid these pitfalls:
1. Confirmation bias. People often support their strong financial opinions by only seeking out confirming information. One of my financial-planning clients worried about inflation and its potential impact on his savings. He only read articles that stated inflation and interest rates would soon be going through the roof. But this economic prediction didn’t come to pass.
MY BIGGEST INITIAL mistake as a financial planner: underestimating the power of emotions. My office is located near top universities such as Harvard, MIT and Boston University. I assumed my well-educated clients, many with strong quantitative backgrounds, were simply looking to me for additional analytical insights.
Instead, my clients proved to be as human as everybody else. One top academic statistician, who claimed to be frugal and cautious, shared with me an annuity policy he purchased from a close friend at his church.
THE OLD ADAGE SAYS it’s never too late to change. Yet, once folks over age 50 decide they need to change careers, moving early has some key advantages:
It takes time. Career transitions can be slower than anticipated.
It legitimizes the move. Switching before the traditional retirement age may demonstrate your commitment to a new career.
It’s enjoyable to switch. If you know things aren’t currently working, why not make the change?
I faced my own career-change decision at age 51.
FAMILY MEMBERS OFTEN look to me to “sort out” their financial problems. That’s no great surprise: I’m a fee-only financial planner. But I’ve resisted the “financial fixer” role.
Instead, I try to act more as an educator—by reframing the issue at hand and encouraging family members to take an active role in solving their problem. Consider three examples:
1. I have a relative who graduated from an expensive university. He was understandably concerned about his high level of student debt.
Comments
The younger generation faces considerable educational challenges due to the rapid pace of change plus AI. Adaptability and continuous updating of educational skills have become crucial.
Post: Generational Perspective
Link to comment from May 10, 2025
Thanks Dan. Agree generalizing about different generations is not simple. But trying to understand generational perspectives helps avoid over simplifying topics.
Post: Generational Perspective
Link to comment from May 8, 2025
Douglas, nice to read a significant inheritance story which does not revolve around the person becoming a spendthrift or stingy. People who develop sensible values which reflect their personality before receiving an inheritance or major gift, appear moving forward to be most content. Your parents most likely would be proud. Their financial gifts allowed you to continue your life on its chosen path in a personalized style.
Post: Follow Those Values
Link to comment from July 26, 2023
William Bernstein remains my favorite personal finance author. I preordered and read his new superb edition of The Four Pillars of Investing which updates his 20 year old classic. His historic knowledge is wide ranging and he dramatizes the implications of hitting a bad sequence of returns for far longer than we typically can anticipate. Dr. Bernstein's quantitative background and instructional skills are impressive. In my opinion, no one better explains and demonstrates,(number geeks - read his The Intelligent Asset Allocator), the value and importance of diversification. He appreciates the clear benefits of stock ownership (reward) despite the risks, and he emphasizes why some stock ownership is essential in an inflationary world. But in his latest edition, he feels compelled to emphasize how the worst 2% scenarios can overturn an entire lifetime investment plan if not prepared. Bill Bernstein explains why those who are approaching or have taken retirement, face the additional hurdle of little or no human capital to buffer extended equity losses. He brilliantly summarizes our future investment challenge at various life stages: The main hazards on the “highway of riches,” the road that conveys wealth from your present self to your future self—you’ll need patience, cash and courage, and in that order. Creating and sticking to an appropriate portfolio is his prescription, which he stresses can be easier said than done.
Post: Courage Required
Link to comment from July 22, 2023
Great article. Remodeling is a perfect example of life's financial complexity.
- Investment? - If one could solely decide based on investment value, the decision is fairly simple. Skip it.
- Need? My very young kids used to say "I need this." Their boring father would admonish them with a correction, "you may want this, but it is not a need." But there are times when addressing wants are fine to fulfill, especially if they are personally affordable.
- Selfish? - Sometimes a remodeling project means more to one party in the house than another one. In our case, I felt our old kitchen was fine, and I was content devouring great meals. My wife, who spent hours doing creative cooking in that room, felt the outdated kitchen needed remodeling.
- Hassles? Simply writing a check for the contractors may be the least of your worries. We had a busy contractor who insisted on a plan which was far easier and quicker to implement, rather than what was needed given our space. Fortunately we fired them very early in the process.
The end result in our kitchen remodeling project proved much better than I envisioned, especially given my initial financial management focus. Looking back, it was an adventure which involved adapting during the extended process. But it was well worth it.Post: Breaking My Rules
Link to comment from May 13, 2023
Edmund, good point. Desiring to be part of an impressive story which takes others breath away can be a life long issue. The stress of having to pay for such a journey regardless of affordability should be considered.
Post: The Power to Adapt
Link to comment from April 4, 2023
Kenyon, nice article about taking your good enough approach. As Nobel prize winner Eugene Fama has pointed out, even a sound investment strategy based on historical evidence can potentially take up to a couple of decades to prove correct. I had a similar discussion about having a slight value tilt in a portfolio last year. It had been true that during the past 5 years growth stocks trounced value stocks, so this approach appeared outdated. However this year the tables have turned, and value equities have substantially outperformed growth stocks. If deviating from an index becomes too burdensome, a simpler option of sticking with a total world market index remains viable. With the onslaught of hysterical financial headlines, it remains challenging for an individual with a sound strategy to stay the course. Being grateful and avoiding wildly swinging for investment home runs has many benefits. If you had preferred to join the FOMO crowd last year, there could have been some enticing crypto options to add to your portfolio.
Post: Good Enough
Link to comment from November 16, 2022
Terrific article about our limited resource! I love the time pursuit dichotomy you set out between important decisions such as active versus passive engagement and considering investing versus personal finance matters. These are internal time challenges I find worth examining. I would add two personal internal time pulls that are slight variations of your theme. The first is deep versus shallow thinking. Reading a layered novel or well thought out book takes effort to pursue, but the end result can feel expansive. Reviewing variations of the same news headline or watching a simplistic TV show can temporarily distract me, but leaves me feeling as if I over consumed junk food. The second dichotomy is a variation of the serenity prayer. Focusing on what I can control versus what I can not control remains a big time challenge. I am energized if my attention is directed on what I can control and feel empty reacting or worrying about things that could be simply accepted. Evaluating how we actually spend our time does not come with an easy to read score board like a financial statement. But considering the profound issues you point out is a meaningful exercise. Thank you for this much needed push.
Post: Budgeting Time
Link to comment from October 22, 2022
You offer good advice about starting investing early, the value of passive investing, and not timing the market. It could be added that you and us older investors have benefited from having an investing tailwind. Dr. Antti Ilmanen has written a comprehensive review of the challenge investors face today after having four decades of increasing valuations due to falling interest rates. His latest book "Investing Amid Low Expected Returns" explains how in a low-return environment, a younger person may need to save even more (or work later) to reach the same level of financial independence.
Post: Early Start Early End
Link to comment from September 3, 2022
You are correct that pre-approved checks seem like bad news. The possible high interest rate due and seemingly free money aspect of the pre-approved is a concerning issue. But even those who are careful can run into problems, when unrequested pre-approved checks are mailed out with personal info printed on the check. It means an unaware recipient can't be on the look out for these unwanted checks. Even complaining and insisting a company stop sending out unauthorized pre-approved checks does not always stop additional checks from being generated. A big concern is having these mailed checks land in the wrong hands without the consumer even knowing about their existence. This business process should not be allowed.
Post: Traveling Money
Link to comment from August 31, 2022