Image by Mission:Explore via Flickr
A recent study asked: How do you want to live in retirement? Where do you want to live? What activities you want to engage in?
And based on how much it would cost to lead that lifestyle, people would actually need 135% of their final income to live that way.
We have an industry that asks one question it’s giving the answer to, and a second question that assumes that people can accurately describe their risk attitude (which they can’t). This saddens me because, while I think that financial advisors are overpaid for the service they provide, in principle they could contribute much more, and they could even deserve their salary. But only if they start offering a more useful service, one that they are in the perfect position to provide. Money, it turns out, is incredibly hard to reason about in a systematic and rational way (even for highly educated individuals). Risk is even harder.
Read more here.
