Frame retirement saving progress in small chewable bites, not the mouthful of digits we continually scare retirement savers with. (Photo: Bigstock)

Math junkies have a problem talking in the real world. Why?

Math junkies love numbers. The real world uses words. Words, unfortunately, often represent the Achilles’ Heel of math junkies.

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As a result, we in the financial industry find ourselves stuck between a rock and a hard place. On the one hand, numbers experts perform best when it comes to finance. On the other hand, behavior junkies (aka “normal people”) perform best in the touchy-feely domain of words.

To effectively help normal people navigate through and succeed in the world of retirement assets, we need to use their language to speak to them in our language.

That’s where using “Goal-Oriented Targets” (“GOTs”) comes into play.

By using techniques borrowed from research in behavioral economies, we can better nudge retirement savers into doing the right thing (see “Goal-Oriented Target: How Leading Advisers and 401k Plan Sponsors are Using this New System to Replace Outdated Modern Portfolio Theory Risk Tools,”, August 2, 2017).

Here’s an example that comes from the real world that most people have great familiarity with: determining how much mortgage they can afford.

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Mortgage lenders have very accurate calculators that compute the exact payout requirements for a variety of mortgage scenarios. Want to lower your monthly mortgage payment? You have several options, including increasing your down payment, buying a less costly home, or extending the term of the mortgage. Mortgage calculators take these various inputs and show borrowers how much their monthly payment would be.

Most mortgage borrowers can ‘t grasp the differing impact between buying a $250,000 house versus buying a $350,000 house. They can more easily understand the difference between paying $800 a month versus paying $1,200 a month.

For math junkies, these two sets of number mean exactly the same thing. For real world folks, presenting the difference between the cost of each house just brings a shrug of the shoulders.

Reframe the language to that of a monthly payment, however, and don’t be surprised to see a potential borrower’s eyes light up in understanding. They can more easily see what that monthly mortgage payment means in terms of their monthly paycheck and monthly expenses.

What if we treat retirement readiness not as a long-term journey to a top line number (similar to the cost of a house), but rather a series of incremental baby steps (similar to the monthly mortgage payment)?

That’s what you do when you use the GOT method. Indeed, there’s a free on-line calculator out there that allows you to do this very easily, (see “Retirement Readiness Calculator”).

In fact, it’s so easy retirement savers might be tempted to use it on their own (but if they do, they better read my book Hey! What’s My Number? to learn how to interpret results correctly).

Here’s what the GOT method does: It stops focusing on that “total retirement assets” number that you need by the time you retire and, instead, emphasizes the annual investment return needed.

By reframing the discussion from the big (often seven digit) number to the smaller percentage number, people going from a bug-eyed dazed to a bouncy smile of understanding.

This isn’t merely what some academic researcher says. This is what I’ve actually witnessed when I’ve sat down with retirement savers to discuss their retirement readiness.

Would you like to experience the same excitement when you sit down with retirement savers? Try the GOT method and discover for yourself.

I invite readers to let me know their real-life observations when using this method.