road with years printed on it leading to horizon

For a journalist, there comes a time when there is no tomorrow. A single deadline morphs into a series of cascading deadlines, each building upon the other, until the final deadline comes – and a new column emerges.

I mention this for two reasons. First, April 18th is National Columnist Day. It was on this day in 1945 that Ernie Pyle was killed in a burst of enemy machine gun fire while covering the Pacific Theater on Ie Island.

Pyle had a gift for writing with elegance yet common familiarity. If you haven't read his columns, you can find them at this Indiana University site. You will no doubt agree Ernie Pyle is one of the best all-time columnists.)

The second reason for mentioning deadlines deals with a major challenge facing many retirement savers – or, rather, “non-savers.”

There are many reasons why people put off saving for retirement (see “How to Counter the Top 5 Excuses People Are Using to Explain Why They're Not Saving Right Now for Their Own Retirement,” FiduciaryNews.com, April 16, 2019). The most prominent of these is the classic Mañana Syndrome – putting off until tomorrow what should be done today.

Quite simply, people don't see saving for retirement as important because they can't see retirement. They can't see it because it lies beyond the current horizon. Think about it this way. When you stand on high ground, you can see everything around you. What you can't see is what exists over that horizon.

Retirement saving, therefore, becomes an out-of-sight-out-of-mind issue.

It's actually a little more than that.

Returning to our “high ground” metaphor, imagine standing on that elevated piece of land and seeing a raging bull speeding towards you. How do you react?

Let me rephrase that. How would you react if the bull is twenty yards away? How would you react if the bull is twenty miles away? Can you explain the difference in your reaction?

This is a form of “recency,” the phenomenon from behavioral finance that suggests we respond more frequently to stimuli most recently experienced. A good way to understand this is to name the best all-time quarterback (since we've already established the best all-time columnist).

Today, many will name Tom Brady or Peyton Manning. Why? Because these two have been the top quarterbacks in recent years. Lower on the list might be Joe Montana. Still lower might be Johnny Unitas and perhaps Otto Graham. Likely not even on the list is Sid Luckman or Sammy Baugh. Yet, in retrospect, serious students of the game can make a good case that these QBs from long ago eras are better suited for the “best all-time” label.

That's the consequence of “out-of-sight-out-of-mind.”

While the debate of best all-time quarterback makes a great happy hour conversation, there's no real harm if the opposing sides fall prey to recency (arguing Brady vs. Manning as opposed to Baugh vs. Luckman).

Falling prey to recency when it comes to saving for retirement, on the other harm, can lead to dire circumstances when it comes time to hang up the cleats. Fighting this battle in the hearts and minds of employees is a constant struggle for retirement plan sponsors and financial fiduciaries.

But, how can it be done successfully?

In the case of retirement saving, if the problem is retirement is “beyond the horizon,” the trick would be to bring the horizon closer. In other words, identify nearer-term goals and milestones.

Perhaps it's fitting to revisit that routine developed by the columnist. Each week is a series of smaller deadline – smaller goals at regular milestones – that, when added together, form the column that's due at the ultimate deadline. (By the way, for those of you keeping score at home, this is another behavioral finance marvel known as “framing.” Here, we take the same set of facts and circumstances and repackage them from a different viewpoint that provides a useful guide to better decisions.)

For retirement savers, various ages can represent “near-term” milestones. Maybe they can be the ages of 20, 30, 40, 50, 60, and 70. People like to think in terms of numbers divisible by 10 (or 5 for that matter), so these milestones will be quite recognizable (and acceptable) to most retirement savers.

Once the milestones are identified, then the goals must be determined. These can be savings dollar goals associated with each age milestone. They're likely to be different numbers for different people living in different places. Determining and justifying those number is why financial professionals get paid the big bucks.

Here's how I might envision this tactic unfolding in real life:

Fiduciary: You'd like to live a comfortable retirement, right?

Saver: Sure, who wouldn't?

Fiduciary: Very good. How much are you saving right now for your retirement?

Saver: Nothing.

Fiduciary: Why not?

Saver: Because it's a long way off. It's not important now. I've got too many other priorities. I can put it off until tomorrow.

Fiduciary: I understand that. By the way, for you to live a comfortable retirement, you'll need to have saved x dollars by the time you're y years old. Is that a reasonable goal?

Saver: Sure, I don't see why not.

Fiduciary: Then do you think you can start saving towards that goal right now?

Saver: I guess so.

Whether the saver actually implements this decision is why regular “check-up” meetings are important.

There, I think I've given you enough answers for one column.

Oh, wait. There's one more.

“Slingin' Sammy Baugh.” (Look it up.)

Would rank-and-file 401(k) retirement savers benefit from working with an advisor?

Fee compression: Bad for retirement savers? — Carosa

Instant Insights /

Retirement saving and the Mañana Syndrome – Carosa

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