The Problem with GENERALIZING When it Comes to Your Retirement Future

The problem with GENERALIZING when it comes to your retirement future

Among the myriad things that might cause you to miss the mark when it comes to achieving your retirement goal, the one we might least expect – and yet which is extremely dangerous – is generalization. Yes, generalization! Way too many of us tend to generalize when it comes to our retirement finances.

But, as I often echo to the financial professionals who attend our continuing education classes, there’s a very good reason we call this enterprise personal financial planning, as opposed to group planning.  As elementary as this may seem, I can’t even begin to tell you how often I witness this phenomenon play out. And I’m not blaming you – the retirement investor – because, quite frankly, we have been trained to perceive things in that light: such-and-such financial product is either good for you or bad for you, period! And we say this about every single one of them. Meanwhile, nine out of 10 times, all such pronouncements amount to is someone’s opinion, which I think we both know is a rather simplistic and unfortunate way to approach, of all things, your retirement finances.

Obviously, there are bad and good financial moves and products. No question about that. However, arriving at that conclusion should depend on a specific product’s profile. So although your brother Jim or coworker Mary may have had a terrible experience with his or her 401(k), you may be hurting your financial future by generalizing and simply branding all 401(k)s with the same label.

Again, this may seem elementary and pretty obvious, but it is more common than you’d imagine. Even many so-called, self-acclaimed financial experts – those who should know better – are guilty of this ridiculous trend involving dubious generalizations.

Now here’s some simple advice that may help you avoid becoming a potential victim of this terrible phenomenon in the jungle we know as financial planning. First thing, step away from all the self-serving marketing noise, because not all financial products – even of the same kind – are created equal. Then, consult with an honest, experienced professional – someone you can actually hold accountable if it turns out that he/she steered you in the wrong direction in pursuit of their interests, rather than yours, or did not do the thorough job you expected.

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