Life's challenges

How adventurous would life be, if you were "challenge free"? If you had the perfect body, perfect self-esteem, everyone adored you, and you won the lottery every Sunday? 

Not in my world, this in my mind would be boring. Oh, sure for the first few days it would be wonderful, but after a few days, I would start looking for a new challenge. I think we all welcome challenge in our life. However, we do like challenges that we can or think we can meet.

Now, what if, painful as they may temporarily be, you could choose a life during which challenges might arise whenever your thinking needed expansion, on the sole condition that every one of them could be overcome no matter how daunting they may at first seem?  Every challenge you overcome makes you more.

A good nights sleep

I give a workshop on how to get a better night’s sleep and in it, I offer some ideas to improve Sleep Hygiene. Getting the right amount of sleep is specific to the individual and so while some of us need 9 hours some of us only need 6 hours. 

Sleep Hygiene is the habits and activities we do that may interfere with our ability to sleep well for the time we need. So here are some tips for getting the amount of sleep you need.

1.     Create a routine. That means that you go to sleep and wake up around the same time every day. Even on the weekends.

2.     Be aware of how caffeine affects you. We know that caffeine keeps you up and experts say to stay away from things like coffee, tea, soda, and chocolate six hours before you go to bed.

3.     Do not eat any food three hours before you go to sleep. If you love eating at night here are some options to fill you up...but not keep you up: yogurt, popcorn, bananas, cherries.

4.     Shut off your screens, blue light from a phone, computer or tv can block your body from releasing melatonin – the hormone that regulates a body’s sleep cycle.

5.     Get your body on board. Physical activity can help tire your body out. In a good way. Typically, AM workouts make for PM dreams. That’s because working out raises your body temp and release endorphins. Two things you’re trying to avoid before bed.

6.    Turn the thermostat down. You get a better sleep when your room is between 60-67 degrees.

Listen, we get it. Going to sleep is easier said than done. Here are some of the common complaints people have and how to solve for them.

Issue 1: I’m restless. I went to bed, but I’m just lying here with my brain on overdrive.

·  You shouldn’t stay in bed awake for more than 20 minutes, because it tells your brain your bed isn’t the place for sleep. Get up and do something relaxing, read a book, listen to a song that calms you.

·  Mindful meditation is a great technique to get yourself in the headspace for bed. Focus on your breathing and keeping your mind on the present. No drifting thoughts to past problems or future worries. Stay in the now. Keep your breathing steady. Think of something calming.

Issue 2: I’m a night person. Always have been. Always will be. I once thought that and over a long period of time-shifted from being a night person to a morning person. It is not easy, but it can be done, over time.

·  Set a goal. What time do you want to get up? Once you figure that out, you’re not done.

·  Every morning, early up your wake time by a couple minutes. And every night, go to bed a couple of minutes earlier. It could take you anywhere from days to weeks to get to your goal, but by the time you get there, your body should have adapted to this new cycle.
·  When your alarm goes off, get up. Don’t snooze or linger in bed. (Once you’re up, turn on the lights. Drink water. Have some breakfast. And own the day.

How do people tackle retirement decisions? 2

What can be done differently to encourage people to take the steps required to improve their retirement security? Behavioural finance examines how emotional, social and cognitive factors influence our decision making. It tells us that retirement plan design and communication is too often based on assumptions about people that are wrong.

People don’t always approach retirement decisions (in fact, all sorts of decisions) in a rational way that is in their best interests. The insights of behavioural finance have the potential to help make changes that can yield a difference in the actions of how people save for retirement.

Here are the second five of ten tips based on the principles of behavioural finance for helping people achieve a secure retirement.

6.          Use opt-out versus opt-in features. People who don’t enroll in their retirement plan are making a choice. They are choosing to do nothing. Failing to do something (inertia) and putting off doing it (procrastination) are also the reasons many people fail to increase the amount they are saving and do not rebalance the investments in their portfolios. Autoenrollment and auto escalation features in a defined contribution (DC) retirement plan combined with the use of a target-date fund default option have proven to be highly successful strategies for countering these behaviors.

7.          Limit investment choices. People find it easier to make decisions when they have a small menu of choices. The unintended consequence of a large number of choices is choice avoidance—another way to describe participant inertia and procrastination. A consensus is growing among experts that the appropriate number of funds in the investment menu for a DC plan is between five and ten. Be aware that in a naïve effort to diversify, some participants split their contributions evenly among investment offerings. If a plan offers more aggressive funds than conservative funds, these participants will invest more heavily in the aggressive vehicles than in those that are more conservative (and vice versa).

8.          Structure the menu of investment choice. When people are provided a list of choices, they tend to choose the first choice they are given. If the list is very long, another behavior kicks in—choosing the last items because these are the items that stick in their minds. Consider the implications of these behaviors when a list of investment choices is ordered from least to most risky. Participants may choose the option at the top of the list, which may be too conservative for their needs. At the other extreme, a very long list might result in the selection of inappropriately aggressive investments. Similar problems can occur when investments are listed alphabetically. An optimal investment menu might have at the top a “basket of funds” like a balanced or target-date fund that is appropriate for a majority of people.

9.          Use a stretch match. People tend to follow an employer’s message, even if it isn’t in their best interest to do so. As an example, consider employers that auto enroll employees into a company retirement savings plan offering a 100% match on amounts up to 3% of an employee’s pay. Those who stick with their employer’s “endorsement” will have a total savings equal to 6% of their pay—an amount unlikely to achieve their retirement goals. Take advantage of the endorsement effect by using a stretch match. Offer 50% on amounts up to 6%, which yields total savings of 9%. Alternatively, offer a 50% match on amounts up to 10% to encourage a total savings of 15%. Both of these stretch matches are good starting points.

10.     Provide access to a financial advisor. Thanks to inertia and procrastination, many people also don’t take the time to assess how much they will need to achieve a secure retirement. A lack of knowledge and the complexity of the retirement planning process are viewed as the roots of these behaviors. Providing access to and encouraging the use of financial advice helps people make smarter decisions that keep them moving in the right direction toward their retirement objectives. DC plan participants who have received advice from an independent professional save more, have more diversified portfolios and stay on course even when they feel vulnerable in market downturns.

How do we approach retirement decisions? 1

What can be done differently to encourage workers to take the steps required to improve their retirement security? Behavioural finance examines how emotional, social and cognitive factors influence our decision making. It tells us that retirement plan design and communication is too often based on assumptions about people that are wrong.

People don’t always approach retirement decisions (in fact, all sorts of decisions) in a rational way that is in their best interests. The insights of behavioural finance have the potential to help make changes that can yield a difference in the actions of how people save for retirement.

Here are the first five of ten tips based on the principles of behavioural finance for helping people achieve a secure retirement.

1.    Stress what could be gained or lost. A chief tenet of behavioural finance is that people are loss-averse. People are highly motivated to avoid what they consider a loss. In fact, losing hurts worse than winning feels good. So, frame messages so individuals will clearly understand how they might “gain” by taking action or “lose” if they don’t take action. For example:

a.    Planning for retirement is how dreams become a reality. (Gain frame)

b.    Would you like a 5% pay increase? Take advantage of your retirement plan match. (Gain frame)

c.     Stop missing out on your retirement plan match. (Loss frame)

d.    Would you rather pay yourself or the government? Increase your retirement savings and cut your taxes. (Loss frame)

2.    Point out what others are doing right. When making choices, people tend to do what they think most other people are doing because they believe there is less chance, they will make the wrong choice. They are also influenced by what they think is expected or socially acceptable. Using social norms can help drive people to take a specific action. Consider these two messages to convince workers to save for their retirement:

a.    80% of ABC employees contributed to their retirement plan last year.

b.    Nine out of every ten new hires say “yes” to save 15% of their pay for their retirement.

The more similar the people described in a message are to those being targeted (e.g., people in the same building or organization), the more likely they are to copy the behaviour desired.

3.    Use testimonials versus eye-popping statistics. Rarely does a day pass when there isn’t a news story backed up by statistics warning there is a retirement crisis ahead. Consider this headline:

Experts warn 1 in 3 could face poverty in retirement.

Those among us who are more analytical may feel that using numbers will motivate people to start saving for retirement. Not true, in reality, few people are motivated to act when they are given statistics. People are much more likely to be motivated by a testimonial concerning an individual’s circumstances that taps their emotions. If you just can’t resist including a few statistics in a communication piece, relegate the numbers to footnotes.

4.    Encourage individuals to picture their retirement. People have a tendency to focus on the short term versus the long term. Given a choice, they usually select a smaller payoff now versus a bigger payoff later. They are more likely to buy something for today or set aside money for a vacation in a few months than save for retirement. The short-term purchases are more tangible.

One way to help counter workers discounting their future is to encourage them to envision their future retirement— where they want to live, what they want to do, etc. Having a personal retirement picture helps people avoid temptations to spend today, which can derail their retirement.

5.    Leverage competition. Some people are motivated by competition. Competition with oneself and others can also be used to promote retirement savings. Try challenging individuals to defer at least 10% of their annual salary for retirement. Or have groups compete to see who can save the largest portion of their income on average. Employers could offer prizes like gift cards, a free lunch or vacation days to the winner(s).