With the baby boomers moving into retirement, the next generation, particularly those in the middle class are “increasingly aware that saving for retirement is on them.” So says Greg McBride, chief financial analyst at Bankrate.com. (“Fast Facts,” Money, July 2015 pg. 18.) Perhaps that’s why another survey of 3,000 adults by the American Psychological Association showed that the top source of stress for people was worries about money. (“Don’t Worry About Money. Be Happy,” by Diane Harris, Money, July 2015, pg. 9.) Add to those concerns stock market volatility and the fear of another precipitous drop like the one in 2008-09, and those planning for retirement may have a hard time sleeping.
One strategy to protect yourself is to make a bucket list for how to treat the money you have. A trio of advisers suggest three buckets: One to cover near-term costs which would include holding cash and/or short term bonds. The second bucket might hold higher-yielding intermediate bond funds as a hedge against inflation. The third would contain money allocated for growth, meaning money you won’t need for a few years. (“Never Worry about Money again,” by Carla Fried, Ian Salisbury and Taylor Tepper, Money, July 2015 pg. 47.)
If you still can’t sleep at night, you could turn to a new breed of financial adviser. No, not robots (Blog 4/16/15), but humans who make a living as “financial therapists.” (“Plan: New Help for Money Ills,” by Kate Ashford, Money, July 2014 pg. 27-28) These folks tune into your emotional ups and downs as well as your financial ones. For example, If I tell my “plain vanilla” broker I’m worried about my investments, he takes me through the numbers as if numbers alone could assure me. Having been raised in poverty, I dread becoming a bag lady. (9/23/14). I need someone who can address my fears. That’s where a “financial therapist” comes in. He or she has a working knowledge of the market, but, unlike my plain vanilla broker, is trained in the social sciences. A financial therapist’s job is to match the client’s emotional mind set with his or her investments. They don’t give direct stock advice, but they do align your expectations with how you invest.
Beware, however, the field is new, about 5 years old, so no accreditation is required to set up a practice. Author Kate Ashford suggests looking for a therapist who is a member of the Financial Therapist’s Association (financialtherapyassociation.org).
Because the field is new, insurance doesn’t cover financial therapy and the fees can range from $100 to $150 an hour. (Ibid pg. 28.) On the other hand, if a counselor can help you develop a financial plan that matches your emotional needs, sleeping at night may be worth the money.