There You Go Again Blaming the Victim

How the toxic retirement industry sets people up to fail

It blows my mind. And makes me angry.

Just how tone deaf can the retirement industry be?

I don’t like calling people out so I hesitate to even link to the story I read the other morning, however sometimes we need to call people out. It’s less about calling out one person and more about highlighting one person’s comments as emblematic of what’s wrong with the notion of traditional retirement and how finance types advise people on getting there.

To give credit where it’s due, I’m thrilled the professor the article quotes focuses on the psychology of investing for retirement.

So here’s the good part:

“A lot of the things that I study look are behavioral biases and psychological blind spots,” said Vicki Bogan, an associate professor at Cornell University. “When it comes to retirement savings, people make these systematic mistakes in managing their finances.”

And the not so good part:

“So they should be doing things, but they don’t behave according to the way that a financial planner or financial model would say that they should be,” she said…

“They don’t know where to start and so they do nothing,” said Dr. Bogan. “So you kind of get stuck with this inertia and so ‘I’m not investing right now, why should I do anything’ loop.”

Or just maybe the advice you’re floating sucks and doesn’t work for massive swaths of the population, evidenced by the fact that it’s not working for massive swaths of the population.

To effectively chastise people and call out the allegedly dysfunctional psychology that’s preventing them from doing what “a financial planner or financial model” says they should do amounts to little more than blaming the victim.

People struggling to save for retirement — and freaking out as a result — absolutely are victims.

In the present environment, a condescending tone from a professor alongside zero acknowledgment that it might not be “people’s” fault, but the advice’s fault doesn’t help matters much. It only makes them worse.

We have covered this ground before. We understand there’s a problem. Myself and others have covered the retirement conundrum on Making of a Millionaire like crazy. However, we tend to focus on solutions to the problem, not victim-blaming.

Solutions such as:

• The concept of work has changed in recent decades, particularly for people under 50 and, especially for people under 40. So the concept of retirement must change along with it.
• Focus on helping people work longer by choosing work they not only can but want to do into relative old age.
• Eschew the conventional save $500 a month for 40 years advice for a focus on cash flow generation and strategic income allocation designed to satisfy short- and long-term obligations, goals, and desires.
• Empower people. Don’t tell them they’re psychologically inept because they can’t do what a largely white and aging financial advisory machine tells them to do.

Nothing’s going to change unless the retirement industry changes.

Actually, scratch that.

The retirement industry will go the way of travel agents if they keep this up. They’ll manage old people’s money for them. When the old people die, they might pick up a few of the older people’s oldest offspring as clients.

Beyond that, they’re finished. They’re useless.

It’s the classic case of blaming the victim and believing you know best. However, as with parenting, we like to think we know best when we’re dealing with another human who’s at least 20 years younger than us. But we don’t. And even if we did, we shouldn’t act like we do. It creates a toxic, unproductive environment.

My biggest fear — and one of the reasons why I keep coming back here day after day — is that people will read the drivel I excerpted above and feel like they’re failing. Sadly, traditional media outlets (who also do excellent work) put this drivel on marquee display and repeat. So it’s tough to not feel bad about yourself when all you hear is that you can’t execute on the retirement advice the establishment continues to give.

Because if they keep giving it, it must be working.

I’m sure it does work for lots of people. However, for those experiencing difficulty on the journey to financial flexibility, it’s not an individual shortcoming. It’s a collective “failure.”

The retirement industry is setting you up to fail. You deserve little if any of the blame.

I hope there’s a class of young financial advisors coming up the ranks doing it differently. Going into their bosses’ offices at big firms saying the way we’re doing it isn’t working. Do you even know what TikTok is in your stupid shirt and tie? Get out of the way and let the millennials you’re hiring lead.

This article is for informational and entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.