Academics and Retirement : What Makes Them So Smart?

Ah, there’s the rub –delayed gratification.

Jones said that the best individuals at saving for retirement are those willing to sacrifice now in order to save for later. She likens it to the ‘marshmallow test,’ that illustrates how willing someone is to put off immediate reward in order to receive potentially greater reward in the future.

“That attitude and that behavior informs whether people are going to be willing to save and make sacrifices now for more comfort later in their lives,” Jones said.

In other words, it isn’t book smarts that distinguishes higher education employees as retirement planning whizzes, it is street smarts.

“I would say that most of our clients do have college degrees, but I don’t think that’s a requirement,” Jones said. “I think probably the common factor is that they’ve had more successful careers, and they therefore have more resources that they feel they need to protect and plan for.”

That is another important lesson for retirement advisors—the importance of equating retirement planning with asset protection. And the most important asset is lifestyle.

“Like so many planners, we experience people coming to us because they have this question A, and question A is really way down the path. And they have to answer a whole bunch of other questions before that,” Jones said.

“For example, they ask, ‘How do I manage my money?” Well, before we can do that well we need to find out what is your lifestyle? How much money are you going to need? What kind of risk requirement and risk capacity do you have? What other financial issues are you dealing with? Have you protection in terms of insurance and career and housing?,” Jones said.

Asking All the Right Questions

The good news is that higher education employees seem to be asking more of the right questions, and that gives them a leg up over a majority of other Americans.

For proof of that, consider just-published data from another retirement planning study, this one from the Center for Retirement Research at Boston University. In the study, “Dog Bites Man: Americans are Shortsighted about Their Finances,” the researchers found that among the general population:

• Americans need to save more on their own for retirement, but human nature suggests they will focus more on day-to-day financial needs.

• Analysis of a recent survey confirms that a household’s level of financial satisfaction is tied more to short-term – rather than long-term – concerns.

• Even households that are in reasonable shape in the short term do not seem to focus more on distant concerns like retirement saving.

• And households that are more financially literate appear only modestly more attuned to long-term financial issues.

Jones needs no convincing. She notes that the data on higher education employees certainly distinguishes them from Americans-at-large. That is especially true of their willingness to seek out financial advice on their own while still early in a career.

“I find that it’s very hard to get anyone to think about retirement until it feels real, and that point of feeling real is different from one person to the next,” Jones said. “But age 50 and up is when we finally see them, when it’s looming large. If we get to see someone before age 50 we’re pretty darned excited. It has a much bigger impact on a family if we can help them make good solid financial choices earlier on. But that is a luxury we don’t often get.”