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Cyber Security Awareness Webinar

Event, News, Webinar

Join us for an in-depth webinar covering all key aspects of Cyber Security presented by JP Morgan’s Global Head of Cyber Security Awareness. 

We hope to share insights, provide practical guidance and support to help you improve cyber understanding, and better protect against the ever-evolving threats of cyber crime.


March 17th from 11 – Noon PDT

 

REGISTER FOR THE WEBINAR

 

March 14, 2022
https://retirementdna.com/wp-content/uploads/2021/05/Young-women-using-computer-Cyber-security-concept.-1166334015_2122x1416-1.jpeg 1414 2119 The rDNA Team https://retirementdna.com/wp-content/uploads/2021/06/retitrementdna_brand-identity_final_RGB-01-1024x293.png The rDNA Team2022-03-14 12:03:482022-03-14 12:18:40Cyber Security Awareness Webinar

Emotional investing and reticence to plan

News, Retirement Planning
Retirement planning

Emotional investing and reticence to plan, the psycho-social aspects of financial wellness.

Why do investors behave as they do? Investor behavior often deviates from logic and reason. Emotional processes, mental mistakes, and individual personality traits complicate investment decisions and increase the difficulty of comprehending clients’ judgments. Behavioral decision-making can also have a detrimental influence if investment professionals ignore or fail to grasp this aspect of decision-making.

Financial literacy, propensity to plan, and future focused mindsets are directly associated with optimal retirement planning behavior. At Retirement DNA, we believe that education is at the core of good financial planning. That’s why we offer the Financial Wellness program to businesses whose teams have access to retirement options like 401Ks and other SERPs.

The psychology of planning is complex and wrapped up in many well-studied behavioral predispositions.

Researchers across disciplines of psychology have focused attention on the impact of the retirement process on post-retirement adjustment and well-being. This year, 2021, marks the year that the youngest Baby-Boomers (born in 1956) will reach retirement age (65). The influx of retirees into the economy and into the social fabric of the country will shift many aspects of saving, spending, and our general perception of what a healthy retirement looks like.

We hope that by addressing the elements that contribute to a head-in-the-sand approach, we can help younger people plan earlier (and smarter) and also, help business owners set up the kind of plans and financial education that will bring value to their employees and articulate the kind of caring culture that inspires cohesion and optimal performance. Financial education and retirement planning have not kept pace with the changing habits of the workforce. Part of that is tied to the psychology behind planning and investing.

We are all emotional investors.

We believe the familiar is better, we think what we own is worth more and that there will always be a better upside on the horizon. Actuarial data indicate otherwise but it is very hard for our emotional brains to parse all the data and make savvy choices at the right time.

According to research from the National Institutes of health, at the present time, approximately 50% of the working population envision either a full retirement, a partial retirement with some level of continued earning or they speak to changing jobs as their long-term retirement solution. The remaining 50% say they will either, “never retire” or have no plans. The fact is, most people do not possess the financial knowledge to make well-timed and optimized savings and investment decisions. Additionally, financial planning doesn’t exist in a bubble. To engage in financial planning for retirement, the factors of income, career, and health all come into play. What we see is that, even with optimal life, career, and health situations, there remains a reticence to discuss aging, financial plans, and goal setting, making the conversation around financial planning for retirement a challenging one in the best of circumstance.

For employers setting up retirement contribution options for their teams, addressing this reticence can be as simple as a regular cadence of financial wellness education without pressure to act. It has been shown that financial planning is not something that is affected in short bursts but over the course of an entire career, this influences coming from employers, friends, financial wealth advisors, and other trusted figures in an individual’s life. Incorporating financial wellness education can relieve stresses from the employee workforce that reduce productivity and increase stress responses. A stressed workforce is less productive and more likely to change positions, increasing costs for employers.

From a national perspective, financial wellness education is in short supply.

Schools and even universities offer little in the way of financial planning and investment preparation to young people. Because of the lack of early education, workers enter careers with little to no vocabulary to address financial retirement planning. It is therefore left to employers to provide resources or leave the workforce to flounder on their own (as referenced above, this can lead to lower productivity and decreased job satisfaction as well as high stress from financial concerns that reduce workplace efficacy).

To truly address the individuals’ reluctance to plan for retirement in conjunction with their lack of knowledge around the options that exist, we have to look at some of the socio-emotional factors that affect the ways in which we address financial planning. For example:

  • Clarity of financial goals
  • Retirement-related anxiety
  • Perceived social norms
  • Availability of voluntary retirement saving programs
  • Tax incentives for saving

Solutions to this reluctance to plan for retirement lie in regular education, frank open conversations, and strategic offering of financial wellness education. In order to address the psycho-social bias that affects every investor, it’s important to know what we are up against.

Here is a brief overview of the areas in which most people experience bias in investing and financial decision-making:

Confirmation Bias 

Confirmation bias occurs when someone is biased towards making a decision that favors the actions they have already taken or a belief that they already hold their new decision confirms their previous actions bringing comfort and familiarity to the new choices. Confirmation bias causes people to make decisions based on flawed or incorrect information. 

Familiarity Bias 

Similar to confirmation bias is Familiarity bias. Familiarity bias occurs when investors choose to make decisions based on industries they understand as opposed to a company whose technology is new or un-familiar. This may entail investing in local or domestic companies. It also may include avoiding taking advantage of newer investment opportunities that should receive equal consideration. 

A potential  outcome from the familiarity bias is that investors assume additional risk by failing to pursue a diversified portfolio or failing to invest in emerging technology that is outside the investors realm of knowledge. 

Experiential Bias 

Experiential bias occurs when people or investors are worried about events that have happened in the past occurring again, they have experienced an event and now believe it is the norm or doomed to repeat. This increased belief that certain events will occur again may be responsible for people acting in a way that avoids potential risk factors as a result. 

A prime example of this is that many people chose to abandon the stock market after the extreme effects of the financial crisis in 2008 and 2009. As a result of their experiences, many had negative perspectives of the stock market as a whole and had fears of taking additional risks for fear of another downturn. 

Loss Aversion 

Loss aversion occurs when investors are more concerned about what they could lose than identifying the potential gains available to them. While it is important to carefully review the risks associated with certain financial choices or investments, one’s willingness to take on a certain amount of risk is critical. 

Disposition Effect

Similar to Loss aversion is the disposition effect. This occurs when an investor is unwilling to accept their loss. Oftentimes inventors choose to sell their top-performing investments and hold onto those that are not performing well. They do so with the hope that it will eventually return to its purchase price to at least break even. 

All of these psycho-social influences on the way people interact with their investments and plan for their retirement work against the logical choice which is to start young, stay the course, and let time and intelligent investment opportunities optimize your money and create the kind of comfort in retirement you will want and need.

When you’re ready to start educating your team about the advantages of retirement planning, reach out to us.

June 18, 2021
https://retirementdna.com/wp-content/uploads/2021/06/iStock-1262616938.jpg 1414 2121 The rDNA Team https://retirementdna.com/wp-content/uploads/2021/06/retitrementdna_brand-identity_final_RGB-01-1024x293.png The rDNA Team2021-06-18 12:36:512022-02-11 12:24:22Emotional investing and reticence to plan

CalSavers – What is it?

News, Retirement Planning
Calsavers

The CalSavers Retirement Savings Program is a new state mandated retirement plan. It is for employers who don’t offer a company retirement plan. Employers who are subject to CalSavers are those with at least five employees who are over the age of 18 and have at least one employee working in the state of California.

For more information visit www.CalSavers.com!

Is CalSavers Right For Your Company?

Many employees are not saving for retirement and look to their employer for ways to save for retirement. Provides a way for California workers to save for retirement. Automatic payroll deduction Roth IRA savings program for employees who lack access to a workplace retirement plan.

click here to download the PDF

Important Considerations


▪ Employees will be automatically enrolled in a Roth IRA at 5% of salary and with an annual auto increase of 1% per year of up 8%
▪ Employers must enroll eligible employees within 30-days of employment and keep track of sign-up and opt-out forms.
▪ The employer is responsible for uploading and monitoring employee contribution amounts every pay period.
▪ CalSavers IRAs are subject to the same rules and regulations as other Roth IRAs which mean high-income employees and/or employees part of a the high-income household will need to continuously opt-out
▪ Only employees will be able to contribute, no employer contributions.
▪ Employers must take action before compliance deadlines or penalties apply.

June 10, 2021
https://retirementdna.com/wp-content/uploads/2021/06/iStock-1146680857.jpg 1414 2121 The rDNA Team https://retirementdna.com/wp-content/uploads/2021/06/retitrementdna_brand-identity_final_RGB-01-1024x293.png The rDNA Team2021-06-10 14:37:482022-02-11 12:24:22CalSavers – What is it?

The psychology of financial planning

News, Retirement Planning
Your future self

Talking about money can get uncomfortable fast. While planning for retirement is the most logical step in creating the future you desire, there are unconscious roadblocks many people have to overcome to heed the advice of their financial planners who are successful often self-describe as both planners and pseudo-therapists.

With these facts in mind, the CFP exam is now incorporating psychology into the requirements for certification (starting in 2022).

From the CFP:

UPDATED PRINCIPAL KNOWLEDGE TOPICS

An important result of the 2021 Practice Analysis Study is the updated list of Principal Knowledge Topics. Major changes in the 2021 Principal Knowledge Topics list include:

  • A new category called the Psychology of Financial Planning.
  • The consolidation of the prior Education Planning category and underlying topics within the General Financial Planning Principles category.

The updated topics will be incorporated into the CFP® exam starting with the March 2022 exam. CFP Board Registered Programs will revise their curricula to incorporate the updated Principal Knowledge Topics in 2021. Effective immediately, CFP Board will begin to grant CE credit for programs that address the new topics.

Many people find that, as they approach retirement, they have not accounted for the lifestyle they want to maintain and wish they could change spending or saving habits earlier in life.

In 2019 a study from the Employee Benefit Research Institute found 40% of American households between 30 – 65 will run out of money in retirement, with 67% of millennials having nothing saved for retirement at all. To be fair, most young people have a hard time imagining 5 years from now, much less 45 years into the future.

The good news is, with proper motivation, small investments compound, creating huge retirement savings, if you start in your 20s. All is not lost for those of us well past that age, but sharing these insights with the younger generation is a gift we can give them.

So, what can motivate a younger person to save for retirement when life is so fun (and budgets are so tight) right now? One student tried bringing young people face to face with their retirement-aged selves. They took photographs and, using computer imaging software, aged them. When faced with their future selves all participants agreed that saving fro retirement was now a priority.

The student project was based on a 2011 study by social psychologist Hal Hershfield, who showed that, faced with an older version of themselves participants chose to put away more for retirement than those who had not seen the aged version of their own face.

At Retirement DNA, we know that the building blocks of retirement are based in sound planning, wise investment, and good financial education. That’s why we conduct custom plan audits to review where you are, where you want to be, and how we can help you get there.

April 19, 2021
https://retirementdna.com/wp-content/uploads/2021/05/iStock-514134767.jpg 1414 2121 The rDNA Team https://retirementdna.com/wp-content/uploads/2021/06/retitrementdna_brand-identity_final_RGB-01-1024x293.png The rDNA Team2021-04-19 21:45:002022-02-11 12:24:22The psychology of financial planning

Target Date Funds Simplified

News, Retirement Planning
TDFs

Target Date Funds get a bad rap

Many investment advisors will tell you that TDFs are generic, unsophisticated, one-size-fits-all choices. The choice of those without other choices. And while TDFs are not, actually, for everyone, we took a look at this article from Vanguard that reviews what a TDF is and why it works for people who need a hands-off option for some of their invested assets.

A fund of funds

Each Target Retirement Fund invests in several other funds to create a broadly diversified mix of stocks, bonds, and, in some cases, short-term reserves. The year in a Target Retirement Fund’s name is its target date, the year in which the investor in the fund will retire and leave the workforce. 

A self-adjusting mix

Your fund manager gradually adjusts the investment mix to be more conservative as your target date approaches. See this infographic from the Vanguard:

Target Retirement Fund Glide Path

Choosing a Target Retirement Fund

Consider the Target Retirement Fund with the target date closest to the year you plan to retire. If you haven’t planned that far ahead, you can use the year you’ll reach your full Social Security retirement age (65 to 67, depending on when you were born). Once you review that fund’s mix of stocks and bonds, you could choose a fund with a later target date if you’d prefer a more aggressive investment mix. On the other hand, if you’d prefer a more conservative mix, you could choose a fund with an earlier target date. 

Because your personal situation could change over time, consider reviewing your asset mix from time to time to make sure your portfolio matches your goals and risk tolerance. 

The target date is not the end

Nothing special happens with a Target Retirement Fund when it reaches its target date. The fund doesn’t stop investing, and you don’t need to take your money out of the fund. The gradual move from stocks to bonds simply continues. Target Retirement Funds are designed to keep your money invested appropriately throughout your retirement years. 

All investing is subject to risk. Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments (stocks) to more conservative ones (bonds and short-term reserves) based on its target date. An investment in a Target Retirement Fund is not guaranteed at any time, including on or after the target date. Diversification does not ensure a profit or protect against a loss in a declining market. Investments in bond funds are subject to interest rate, credit, and inflation risk. 

March 19, 2021
https://retirementdna.com/wp-content/uploads/2021/03/iStock-1211578175.jpg 1299 2309 The rDNA Team https://retirementdna.com/wp-content/uploads/2021/06/retitrementdna_brand-identity_final_RGB-01-1024x293.png The rDNA Team2021-03-19 21:56:002022-02-11 12:24:22Target Date Funds Simplified

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Investment Advice offered through Resources Investment Advisors, an SEC-Registered Investment Advisors and wholly-owned subsidiary of OneDigital. Securities offered through Triad Advisors, LLC (member FINRA/SIPC). RetirementDNA, Resources Investment Advisors, and OneDigital Investment Advisors are separate entities from Triad Advisors, LLC. Please note the other companies referenced on this website are separate entities from RetirementDNA, Resources Investment Advisors, and OneDigital Investment Advisors and are not authorized to provide, and do not provide investment advisory services.

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Investment Advice offered through Resources Investment Advisors, an SEC-Registered Investment Advisors and wholly-owned subsidiary of OneDigital. Securities offered through Triad Advisors, LLC (member FINRA/SIPC). RetirementDNA, Resources Investment Advisors, and OneDigital Investment Advisors are separate entities from Triad Advisors, LLC. Please note the other companies referenced on this website are separate entities from RetirementDNA, Resources Investment Advisors, and OneDigital Investment Advisors and are not authorized to provide, and do not provide investment advisory services.

site design by digitalstoryteller.io

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