Tomorrow’s Problem: Why Managing Future Finances Is So Daunting

Yogis may advise you to live in the moment, but a financial advisor is likely to recommend considering the future. 

That can be hard to do for something as intimidating as saving enough for retirement. Older generations tend to feel more confident than younger ones in managing their current finances, according to a recent survey from Edward Jones and Gallup of more than 5,000 adults. That’s no surprise, seeing as they have years of experience finessing their budgets and weathering market downturns. But when it comes to future financial needs, the gap shrinks: 26% of Gen X respondents in the US said they had a “great deal” of confidence, which is the same for Gen Zers and just one percentage point above millennials. While 37% of baby boomers said they were confident in managing their future financial needs, that’s significantly less than the 54% who said the same about their current financial needs. 

Part of what makes long-term planning so hard is that our future self can feel like a stranger, said Jamie Bosse, senior advisor at CGN Advisors. “It’s much easier to prioritize the needs and wants of the person you are today than to give up money today for someone you may not even be able to picture clearly 20 or 30 years from now.” 

Mindful Moves  

Another reason future finances can take the backseat is that today’s costs are high for everything from housing and childcare to groceries and insurance. “Everyday expenses get prioritized because they show up as a bill with a due date, and retirement never does,” said Juan Hernandez-Ariano, principal at WealthCreate. 

But there are steps you can take to shift your mindset: 

• Hernandez-Ariano recommended turning retirement savings into a monthly payment that leaves the paycheck before anything else gets decided, which many already do via a 401(k). Gradually increase how much you save over time. “The easiest time to raise it is when another payment ends, like a student loan that’s finally paid off, because the household has already been living without that money,” he added. 
• Bosse suggested making your future feel more tangible. “Instead of thinking about retirement as some vague point in the distant future, picture what you actually want that life to look like,” she said. 

Too Much Prep? Squirreling away every dollar isn’t the answer. “The goal isn’t to stop enjoying your life now,” Bosse said. “It’s to make sure your future self is included in the financial decisions you’re making today.”