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How Do You Plan for a Future You Can’t Accurately Predict? – Presented by Mark K. Lund, Utah Financial Advisor

Financial Advisor UtahIn 1992 American political scientist Francis Fukuyama published The End of History and the Last Man. This highly regarded book declared that global politics had reached its final stage. Liberal (in the classical sense) democracy would continue to spread until it was the standard form of government for the nations of the world.1

At the time, with the fall of the Soviet Union and burgeoning democracy movements around the globe, it seemed like Fukuyama was merely stating the obvious. Who wouldn’t want a western-style government?

However, with more than thirty years of hindsight, including the war on terror, the resurgence of Russia and China, and a worldwide shift toward greater tribalism, it now seems like history didn’t “end” as promised. There have been huge societal changes that Fukuyama’s theory simply didn’t predict.

It turns out that the end of history illusion doesn’t just apply to political scientists. We all suffer from an inability to see ourselves changing substantially from how we are today.

About a decade ago, a research team conducted a series of studies where they measured people’s perceptions about how much they’d changed in the past versus how much they expected to change in the future.2

For example, a 40-year-old would be asked about the ways they had changed since they were 30. Then they would be asked to predict the ways that they would change as they reached 50.

Contrary to logic, participants acknowledged significant transformation from the past, but predicted very little change in the future. We tend to see ourselves as having reached our final point of development and believe that we will remain essentially unchanged in the future. In a sense, we tend to think we’re at the end of our own history.

Aside from being an interesting blind spot in the human psyche, the end of history illusion does have significance for retirement planning. As you think about your post-work years, you need to be sure that you’re not just projecting exactly who you are today into the future.

Noted retirement strategist Michael Kitces suggests that, while specific goals are important for saving, you shouldn’t lock yourself into a future that won’t fit who you are (or might be) in twenty years.

What studies suggest, writes Kitces, “is that at a minimum, the way that we save and invest toward retirement (and other) long-term goals should probably be deliberately flexible.”

It’s not possible to predict exactly who you will be in retirement. There’s no way to foresee how unknown future events will shape you. But you can be sure that it won’t be exactly who you are today with just a little more gray hair.

Your trusted advisor can help you explore and plan for the possibilities you dream of, while helping you maintain the flexibility to handle the surprises that life will send your way.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc.
11576 S State Street, Bldg. 1002
Draper, UT 84020

Sources:
1. http://go.pardot.com/e/91522/wiki-End-of-history/93w42c/2088347008?h=UCbUuc_hGRs_NyNKletdiN6518xEOqHVEU3H_EoytdY
2. http://go.pardot.com/e/91522/sion-and-goal-based-investing-/93w42g/2088347008?h=UCbUuc_hGRs_NyNKletdiN6518xEOqHVEU3H_EoytdY

Disclosure:
This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

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