Readers of a certain age may remember Popeye’s friend, J. Wellington Wimpy. Wimpy remained “glad to pay you Tuesday for a hamburger today.”
It is human nature to prefer pleasure in the present and to procrastinate pain. Marketers have long known this to be true. Why do you think they offer financing to buy a new car, a mattress, or a dining room table? Consumers are glad to pay them Tuesday for a hamburger today.
So what does the mean to investors?
First, if you are still building your wealth it means that you are probably willing to save more in the future than you are today. Unfortunately that means you may not be saving enough. If this sounds like you, rejoice! Some savvy 401(k) providers have harnessed the power of human nature to help you boost your savings. It is called an Automatic Escalation feature, and it works just like it sounds. You commit to small increases in your savings rate each year. Behavioral Economist Richard Thaler found that participants in an Auto Escalation program tripled their savings rate in just 28 months.
Second, if you are already retired, it means you are probably a little too willing to withdraw from your savings. Let’s be honest – most of us can’t even keep our New Year’s resolutions! It is important to plan your cash-flows and build a retirement plan with someone who will keep you accountable so you can enjoy the present and the future.
Finally, it means you should think honestly about your heirs. Are they prepared to manage their inheritance, or might they need some guardrails to help them stay on track?
At Deupree James Wealth Management we have the tools to help you and your family make smarter decisions with your money. Want to learn more about any of these strategies? Call us at 318-562-1030 today!
This market commentary is for informational purposes only. Please contact your financial advisor for advice about your specific situation. Past performance is not indicative of future results.
Securities offered through Triad Advisors, LLC. Member FINRA/SIPC. Investment advice offered through Goss Advisors, a registered investment adviser. Goss Advisors and Deupree James Wealth Management are separate entities from Triad Advisors, LLC.