I was advised early in my career that you should always take the time to assess your financial resources yourself to make sure that everything is okay as no one will do this job better than you. However, with your pension and retirement funds, you don’t need to do that as long as they are being managed by professionals. I want to go on the record and say that this advice is wrong.
This laid back strategy of wholeheartedly trusting investment professional sounds good at first. It’s simple, easy to follow, and requires no effort. However, although they may be experts in their field, they may not always make wise decisions and are you really ready to blindly put your future in the hands of a stranger? When we choose to ignore looking at this ourselves, we are leaving this very important responsibility in their hands and that can be very costly down the road.
I have also heard people say that since retirement is so far off, it isn’t worth looking at the retirement fund details as it’s boring and can be complicated if you don’t understand the technical jargon. Turning this responsibility over to the plan administrators is so much easier. When you are older and ready for retirement that is when you and the plan administrator will have that discussion about what is next.
In taking that lackadaisical approach, which more people do than you know, you will be setting yourself up to be grossly disappointed in the future. And more importantly, being close to retirement is the wrong time to find out that you may not have as much in your nest egg as you thought.
Far too many people naively think that their pension funds will grow into a large bundle of money by retirement automatically. The idea that they could actually have a small nest egg in the future never crosses their minds. To think such a terrible thought would get you angry and at worst sick. However, this can happen to anyone who fails to focus on retirement now and chooses to leave it until later to oversee the status.
To be truthful, I know too many young people that don’t want to be bothered with this issue right now. They are willing to wait several years down the road, preferably when they are just about to retire. They have told me that if they started looking at this now, this will cause some anxiety and they don’t want that grief. They are content with leaving this in the hands of the people responsible for monitoring their retirement funds as they don’t believe these people will steer them wrong.
Those young people are not by themselves, there are others in their 50s who think the same. In thinking that their retirement funds are totally safe, they may only look at their statements once a year. There are others who don’t bother taking a look at their statements except every three years as they are only concerned with their current issues.
Since I don’t want you to be in that same sad state, I’m writing this article as a warning. Let me share a story about what I went through on this same issue.
I thought that I was safe once myself because my funds were in the hands of experts. Personally, I worked in the financial industry, but I was just as green as anybody else when it came to long-range investing. I put my trust into the hands of my financial people and told them to look out for me. I thought that since they had a lot of time to study and had access to all of the required analyses my investments were safe. As a result, I didn’t have to look over my shoulder to see what was going on regarding my pension and retirement money. Well, this was a major mistake on my part, because I only checked up on the status of my assets once a year. At that time, my review was just brief look at the open and close balances which so many of you have told me that you do the same.
When I got laid off, it shocked me just like many of you. I discovered that my expert adviser had me in some risky stocks and that I had lost over 40% of my pension funds. I was so shocked at this large market loss that I wanted to punch somebody. In order to get some answers, I tried to get an appointment to see my “trusted” financial expert. I came to his office without shaving, had my rough sneakers on, and my other fighting gear on. Yes, I was totally out of control and wanted some answers. Please don’t use this approach, as I was not thinking correctly and things could have gotten nasty.
At that time, I learned that my financial advisor had left the firm to go to another company. In speaking with the new financial advisor, he informed me that since I was receiving the annual reports that were mailed to me, they were under the impression that I knew the stocks that I was invested in.
In speaking with an attorney that I went to see, I was advised that they were legally correct. However, if you ever get laid off, the last thing that you want to hear is that your funds have been depleted. This turned out to be a very valuable lesson on why staying on top of my finances should have been something that I needed to stay focused on, which I did not.
However, in speaking with some other people who went through the same experience, they suggested that going forward I shouldn’t trust anyone to watch over my resources but me. After that negative experience, my sense of responsibility for overseeing my funds changed 180 degrees and I hope that after reading this article, you won’t be foolish like me and will pay closer attention to your funds.
In closing, I had to make some personal changes regarding managing my retirement funds going forward. I forced myself to start watching financial TV shows about money and reading more about the fundamentals of investing. I also went to the library and started reading books on how to invest on my own and it was tough at the beginning, but I got it and am actively investing today. You may not have the time to do what I did, but please take the time to speak with someone who you trust about the details on your pension and retirement funds. This issue is much too important to ignore or put off to another time, as my misfortune is something you don’t want to have happened to you.