YOLO, FOMO and Your Retirement Plan

You know the statistics. Americans are facing a retirement crisis of epic proportions. The brutal truth is that many Americans do not have enough retirement savings or savings accounts in general, and it’s putting their financial independence at risk. A 2017 study by the non-partisan Government Accountability Office (GAO) cited 41% of all U.S. adults do not have an emergency fund capable of covering a $400 emergency expense.

Debt remains the root of the problem

Whether it’s credit card debt, student loans, car loans, or bloated mortgages, we are still a nation that has poor spending habits. For every consumer who has taken control of their debt, or never put themselves in that position, to begin with, there are many consumers who find it difficult to put aside savings for emergencies let alone save for retirement. Some of this can be found in larger economic issues of stagnant wages. But as has been the issue since the dawn of time, many debt issues are self-inflicted wounds.

The more things change, the more they stay the same.

One of the byproducts of the American economy is that every generation has greater opportunities than the one before it. But with more opportunity comes more temptations to rob you from the financial future you want. Technology is a great example of something that makes our lives simultaneously easier and harder. On the one hand, it’s impossible to underestimate how much technology has changed our lives for the better. There are things we do today without giving a thought to how different, and in some cases, more time consuming the same task was to do years ago. At the same time, it has a darker side that has put the retirements of millennials, baby boomers and Gen-X’s alike in jeopardy. One of the ways it does this is because it makes blowing a budget as easy as a tap or swipe. Despite what we know about a sucker being born every minute, it can be so alluring to buy when everything is on sale. And when you can have items delivered to your door as early as the next day, how can you pass up that deal?

Why social media may be worse than a credit card

One example of the pernicious side of technology is social media. Sites like Facebook and Instagram are a great way to keep distant family and friends updated on our lives. However social media has an addictive quality about it. It sucks us in and before we know it we’re spending too many minutes looking longingly at too many of other people’s posts. Even for individuals who are serious about retirement planning, social media can be a trigger for fear of missing out (popularized by the acronym FOMO). When you see your friends, family members, and neighbors sharing their vacation pictures, or showing off their new car or new home it can create feelings of inadequacy and jealousy. These are the emotions that fuel the fear re of missing out. They create the temptation to spend beyond our means or to divert savings that would normally go towards our retirement to fund an expensive purchase.

YOLO is not the antidote to FOMO

In response to this fear, many consumers respond by saying “You only live once” (which also has a popular acronym YOLO). The idea that life is too short soothes our fear of missing out. It can be easy to justify giving in to the temptation caused by FOMO by thinking, “Why should I deny myself, or my family, this once in a lifetime experience.” But you can see how that thinking can quickly lead to a vicious cycle of debt where you borrow from the needs of your future self to take care of the wants of your current self.

It’s a problem that spans generations

Current retirees like to say that issues that result from FOMO and YOLO are exclusive to young people. And evidence suggests this generation is not immune from the debt crisis. In addition to having three times the student loan debt of their parents, many in this millennial generation are admitting that credit card debt, not student loan debt, is becoming their largest issue. However, the twin problems of FOMO and YOLO are still found in older generations who have set aside their dreams of early retirement and are still trying to “keep up with the Jones’ (which is simply FOMO by a different name) even while seeing their Social Security accounts cover less and less of their daily expenses. And as we are living longer, many Americans are trying to redefine aging well.  Since “you can’t take it with you” they say, many Americans are trying to stay “forever young”, which often leads to medical expenses that are of dubious effectiveness or spending on experiences that steal from their fixed retirement resources.

Is there a way out?

The twin threats of FOMO and YOLO will always exist. Future generations may call them by another name, but they will exist. The solution, of course, requires changing the mindsets of millions of Americans. Assuming that you have a budget, a certified financial planner or financial advisor can be a great resource to helping develop a retirement plan and building a nest egg that fits your financial goals as well as your risk tolerance both of which can give you the financial security you desire. Any financial planner will help you set money aside that you can use to give in to some of your FOMO and YOLO indulgences. Just as even the strictest diet allows for the occasional piece of cake, every financial plan will have some room for dreams. After all, you really do only live once.