Columns
Can AI Replace Your Financial Adviser? Not Yet. But Wait.
The Wall Street Journal
Can AI tools like ChatGPT be an effective financial advisor?
Small Steps That Can Boost Your Retirement Savings
The Wall Street Journal
The Secure Act 2.0 is a great start. But it is only just a start. We can make additional changes in retirement plans that will make an even bigger difference for savers in all retirement plans.
How Much Can You Spend in Retirement? Answer These Questions First.
The Wall Street Journal
Too often, we forget that people don’t just accumulate savings over time—they also accumulate differences. These individual differences will affect how much workers will be able to spend as they start drawing on their savings for their retirement income. Combined, they can make a huge difference. much workers wwill be ab
Should You Undo Your Retirement and Go Back to Work? These Questions Might Give You the Answer
The Wall Street Journal
Many retirees have blind spots that could prevent them from seeing why it might make sense to get back to work, at least part time.
As Inflation Rises, Beware of the Money Illusion. It May Cost You a Lot
The Wall Street Journal
People often focus on the actual amount of money they earn or spend, rather than its purchasing power.
A New Reason Investors Shouldn’t Try to Time the Stock Market
The Wall Street Journal
Researchers have amassed plenty of persuasive evidence in recent years showing that market timing—or moving in and out of stocks based on where you think the market is headed—often leads to lower returns. But if that isn’t enough to convince you, perhaps this will: A new study finds that active trading also significantly increases the volatility of a portfolio.
Employers Need to Reinvent Retirement-Savings Match
Harvard Business Review
These are tough times, but the current crisis presents an opportunity not to abandon the match but to reinvent it.
How Covid-19 May Be Unconsciously Affecting Your Financial Decisions
The Wall Street Journal
The coronavirus pandemic may be affecting your financial decision-making in all sorts of hidden ways (or in ways you aren’t even aware of).
How the Secure Act Could Affect Retirement Savers
The Wall Street Journal
In December 2019, the federal government passed into law a set of reforms designed to help Americans achieve retirement security The legislation—known as the Secure Act—broadens access to tax-advantaged retirement-savings accounts and lets Americans keep money in such accounts longer, among other things.
What Quarantine Can Teach You About Spending and Happiness
The Wall Street Journal
The Covid-19 quarantine has inflicted a series of unprecedented social-science experiments upon us. Nobody signed up for these experiments, and many of these changes have been difficult. But it would be a shame to not use the current situation to learn more about our financial and lifestyle preferences. Here are three experiments many of us have been pulled into that could provide insight into how to boost our happiness and financial security when the current crisis subsides.
How To Tap A Retirement Account In A Crisis
The Wall Street Journal
In March, U.S. lawmakers passed a coronavirus relief and stimulus package to help Americans weather the economic shutdown. While the legislation’s promise of $1,200 cash payments to workers drew most of the attention, changes that make it easier for people to take early withdrawals and loans from retirement accounts could have a far bigger impact.
Here's Why Some Investors Panic. And Here's How to Make Sure You Don't.
The Wall Street Journal
Investors are reeling from the selloff in global markets. But here’s the bigger risk right now for investors: that those losses will lead them to act in a way that will result in even bigger losses. It doesn’t have to be that way.
People Don't Save Enough for Emergencies, but There Are Ways To Fix That
The Wall Street Journal
When it comes to saving for emergencies, the evidence is clear: People want to do it. They just don’t follow through.
How Digital Design Drives User Behavior
Harvard Business Review
Decisions of all kinds are increasingly made on screens — and with that shift comes an often-ignored consequence: the design of the digital world can profoundly, and often unnoticeably, influence the quality of our decisions.
If You Don’t Save Enough, Perhaps You Have ‘Exponential Growth Bias’
The Wall Street Journal
Say you have a dollar that doubles in value every day. How much money will you have after a month? For most people, the answer is rather shocking: You will have more than $1 billion after 31 days of doubling. Although the math is just basic arithmetic, many of us assume the final number will be far smaller, a blind spot known as exponential-growth bias.
Why Retirees Are Wary of Annuities
The Wall Street Journal
One of the biggest obstacles to a successful retirement has nothing do with savings. Rather, it has to do with spending, or the decumulation phase of retirement. Simply put, workers have to ensure their savings will last as long as their life, which means spending a sustainable amount.
The High Financial Price of Our Short Attention Spans
The Wall Street Journal
Digital devices are potentially damaging your wallet—but not in the way you might think.
It’s Time to A/B Test Your Financial Life
The Wall Street Journal
On my last work trip, I learned a valuable lesson about myself while melting chocolate in a saucepan. What I learned changed my dining habits—as well as the way I think about my finances.
Common Errors When Buying Insurance
The Wall Street Journal
When it comes to picking health insurance, many consumers make choices that are detrimental to their financial health and that can cost them hundreds if not thousands of dollars a year.
The Secret to Getting Workers to Save More for Retirement
The Wall Street Journal
In the mid-1990s, we began thinking about how to solve an emerging problem: American workers weren’t saving enough for retirement. At the time, traditional pension plans were starting to disappear (they have since become increasingly rare), and it was clear that most workers would need help saving enough on their own.
How Digital Tools and Behavioral Economics Will Save Retirement
Harvard Business Review
In my work as a behavioral economist, I’ve thought a lot about how nudges can drive lasting behavior change. In the domain of retirement savings, Nobel laureate Richard Thaler and I devised a program called Save More Tomorrow back in the mid-1990s that used nudges to help people make better decisions about their long-term financial future.
To Make Smarter Spending Decisions, Answer This Question
The Wall Street Journal
We’d like to ask you a question about your current self and future self. The question will involve a bunch of circles, but bear with us: knowing which circles you identify with can help you determine if you should be spending more or less money now to live the life you want—and the life you can afford.
Governments are trying to nudge us into better behavior. Is it working?
The Washington Post
All over the world, public and private organizations are showing keen interest in “nudges” — interventions and policies that rely on behavioral science to steer people in a particular direction but preserve their freedom of choice. A warning is a nudge; so is a reminder (for example, that a bill is coming due). Automatic enrollment in retirement plans, or in green energy, also count as nudges, so long as people are allowed opt out.
As an Investor, Do You Suffer from ‘Narrow Framing’?
The Wall Street Journal
Many of the financial mistakes people make are caused by a fundamental shortcoming: They can’t see the big picture. In behavioral economics circles, this is known as “narrow framing”—a tendency to see investments without considering the context of the overall portfolio. Many people are vulnerable to it. Are you? To find out, consider a few questions about a coin flip.
Would You Rather Have $1 Million or $5,000 Monthly in Retirement?
The Wall Street Journal
These days, investors can track at any moment how the market’s daily ups and downs are affecting their wealth. Even investors with multiple investment accounts spread across different firms can calculate changes in their net worth in real time, thanks to websites and apps that do all of the work for them.
People Trying to Save Prefer Accounts That Are Hard to Tap
The Wall Street Journal
Imagine this scenario: Somebody offers you $5,000 to save for a future financial goal,such as a vacation or home purchase. You can allocate the money across three accounts, all with the same interest rate. The first account comes with no restrictions, meaning you can withdraw the money whenever you want. The second account comes with a 10% penalty if you withdraw the money within the first year. The third account prohibits withdrawals within the first year.
The Mistakes We Make When Giving to Charity
The Wall Street Journal
All of us think about giving during the holiday season. But it’s possible that we’re thinking about it wrong. That’s the conclusion of recent research, which suggests that our generosity and good intentions are hamstrung by tricks our minds play on us. Most people by their nature are very generous, but they don’t think clearly about the choices they make when they donate to charity.
Before Retiring, Take This Simple Test
The Wall Street Journal
One of the most important financial decisions people make is when to retire. It’s also one of the worst decisions many people make. Specifically, they retire too early, resulting in serious financial shortfalls in old age.
How to Get More Pleasure Out of Retirement Spending
The Wall Street Journal
When I came back from a trip recently, I surprised my 6-year-old daughter with a box of chocolate truffles. In return, she surprised me with an insight into retirement planning—and why we’re doing it all wrong.
The Financial Price of Forgetting Bad Times
The Wall Street Journal
How well do you remember the last financial crisis? Can you clearly recall what happened to your finances? Most people are pretty confident in the accuracy of their memories. Unfortunately, decades of research suggest their confidence is likely misplaced. And that overconfidence can cost them, especially as they age.
How People Underestimate Spending in Retirement
The Wall Street Journal
It’s conventional wisdom among financial advisers: People planning to retire should aim to maintain 70% of their current income in retirement. It sounds sensible enough. But in reality it can encourage people to underestimate the amount of money that will keep them content in retirement.
Why Fund Ratings Could Be Misleading
The Wall Street Journal
How helpful are mutual-fund rankings from research firms such as Morningstar and S&P Capital IQ? New evidence suggests that for many investors, the answer may be “not very.” Fund guides such as Morningstar’s popular rating system of one to five stars appeal to fund buyers because they transform complicated data into an easy-to-understand metric: A five-star fund is superior to a four-star fund, which is superior to a three-star fund, and so on.
How Social Media Can Feed Investors’ Panic
The Wall Street Journal
It isn’t always good to know what other investors are thinking. In recent years, a branch of scientists known as neuroeconomists have discovered a connection between a person’s ability to recognize what others are thinking and how well that same person’s investment portfolio will likely perform in the next market crash. And the connection is not a positive one.
Keep Stock-Market Apps Off Your Phone
The Wall Street Journal
Is your smartphone making you a not-so-smart investor? For many people, the answer is yes, for a simple reason: They tend to make investment decisions based on short-term losses in their portfolio, ignoring their long-term investment plan. Behavioral economists call that tendency “myopic loss aversion”—and it can be incredibly costly.