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Leavey School of Business Santa Clara University

Newsmakers

Finance Professor Meir Statman Head Shot

Finance Professor Meir Statman Head Shot

Meir Statman : Mental Mistakes with Retirement Spending : Wall Street Journal

An article by finance professor Meir Statman on retirement spending was published by the Wall Street Journal.
Glenn Klimek Professor of Finance Meir Statman Head Shot

Meir Statman, LSB’s Glenn Klimek Professor of Finance, wrote a piece that was published by the Wall Street Journal. The article, titled “The Mental Mistakes We Make With Retirement Spending” is based off of his recent book Finance for Normal People: How Investors and Markets Behave (Oxford University Press) argues that the same mind-set that works so well when people are building their nest egg can damage their quality of life in retirement.

An excerpt from the piece:
Imagine spending a lifetime acquiring habits that offer the promise of a longer, happier and more fulfilling life. Then imagine that to have that fulfilling life, you suddenly must abandon all those habits.

Not easy, is it? But that’s what happens when people go from work to retirement, from saving money to spending it. Too often, the same personality traits that facilitate saving for retirement become impediments when it is time to spend that money. The mental tricks we employ while working become mental mistakes when we move into the next phase of our lives.

The result isn’t merely a nuisance. It can lead to a much less satisfying retirement—one in which people spend too little money and spend it on the wrong things, as well as take on too much investment risk. It can greatly reduce the happiness of later life, a time when many people have the time and money (and wisdom) to enjoy their lives in a way they never could before.

So, how can we recognize and conquer those old habits when they’re no longer working in our favor?

Read the full article here »

Learn more about professor Meir Statman »

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