Nov 16 2012

Retirement Planning; Are You Gambling With Your Future?


Nuschke interviewed on CBC

CBC TV needed a financial planner to provide some comments about a story they were doing on a big lottery jackpot. What was prompting their interest was a recent survey that suggested a large percentage of Canadians were “planning” on  either a lottery win or an inheritance as a component in their financial future! [see story at this link)!

Needless to say, planning on a lottery win for your retirement success is at best just silly. At worst, it underlies a bigger problem of desperation and magical thinking. 

It is true that a large percentage of the population just don’t know how to plan for retirement. The negative news about the economy, markets, jobs and so on also likely contribute to an unconscious willingness to think that buying lottery tickets is doing something. Of course you have greater odds of getting hit by lightening.

It is also true that according to financial commentators, even those who HAVE done some savings for retirement have saved only a small fraction of what they “should” have if they are hoping to retire by 60 or 65.

However, that is the conventional thinking about retirement. For those who have been following the Retirement Singularity blog, you will know that I believe conventional thinking about retirement is missing the HUGE implications that advances in technology will have on our lives.

Back to the CBC interview, I’ve done these kinds of interviews many times and used to appear weekly on a morning show with financial tips and strategies. With a TV news interview, you typically will answer questions for several minutes but then they edit it down to maybe 30 seconds of sound bites.  Here are some things I mentioned in the interview about counting on lottery or inheritance that were NOT part of the news clip;

  • We will likely live much longer lives in the future, so we need to rethink the notion of “retirement” altogether. Also since people may live longer, we cannot necessarily count on inheritances
  • Our most valuable asset is our “human capital” which is our ability to earn an income. Investing in our human capital is usually a very good idea (i.e. training, courses, reading, skills development)
  • Even those who DO win big or inherit large lump sums are not “home free”. There is much evidence that coming in to life-altering sum changes your life for the worse.

 How to help people handle lump sums was a side specialty of mine. I have acted as the adviser for many people who have won lotteries, legal awards or inheritances. (see picture at left of some of my books on this topic).

If the person had no history of financial discipline and planning, it was very difficult to help them think clearly about what the money could mean. It’s like going from 0 – 70 in one second. Stories abound of “lucky winners”  losing friends, being a target for scams, loss of privacy, no longer enjoying life and then frittering the money away. 

Thinking clearly about money is a challenge for most of us. The coming changes of added years of healthy life, and disruptions from technology’s advances  will not make things easier.  

Keep posted as I explore the future of our financial lives and the implications of advancing technology with you. I sincerely invite your comments and questions.  

Best of “luck”!!    Michael

[for a look at the CBC piece on lotteries and financial planning go here.  The story starts at about 11:30 of the video.] 



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