Why super-smart people still need financial advice

I mostly work with people in their 40s, so why was I featured in an article about Social Security mistakes people make? Because the story I told applies to all of us.

Although my specialty is advising independent professional women in their 40s and 50s, I have worked with many retirees over the years. When I had a chance to share a cautionary tale with ThinkAdvisor about Social Security, I felt it was important to try to make a bigger point.

Here’s the point: Even super-smart people need good financial advice

When the reporter asked me, “What’s the biggest mistake you’ve seen a person make regarding Social Security?” here was my response: “Not applying until age 75! And missing out on hundreds of thousands of dollars.”

Full disclosure: That person was my dad.

Before you judge my chops, two important notes:

1) This happened 14 years ago, when personal finance was a hobby for me, before I became a CFP Professional, and

2) We didn’t talk about money in my family. Why did Dad decide to share this particular detail with me? Perhaps because it was such a big mistake that it was almost comical. If you didn’t laugh, you would cry.

How a smart person makes money mistakes

We were sitting in the restaurant booth when he told me. Him with his endless cup of coffee, me probably thinking this lunch is going on a bit too long. Dad was a tenured university professor, actually, a Distinguished Professor, which is a whole other level of prestige. At age 75, his career was still on an upward trajectory. Retirement was something he’d only recently begun to contemplate.

A little more background: My grandparents were immigrants with about a 6th grade education, and my dad was born during the Great Depression. The combination of these facts means the only education he got about money during his upbringing was: Work hard and save all you can.

Which is exactly what he did: Got a PhD, worked hard, lived frugally, saved the rest.

The problem is, that’s all he did. He did not invest, he did not educate himself on financial principles, and he didn’t ask for help. He didn’t have a financial advisor. (No, I’m not counting the time my ex-brother-in-law, the stockbroker, sold him some inappropriate funds to earn a commission. Stockbrokers are not financial advisors; they are salespeople.)

So I’m very sure Dad didn’t know the rules for Social Security. For example: There is a great financial advantage to waiting until age 70 to start taking it, but after that, you’re just leaving money on the table.

Back to the restaurant booth: He told me he had just applied for Social Security, at age 75, and the representative told him he had missed out on nearly $500,000. Then Dad looked at me and laughed in a “Aren’t I a dope?” kind of way. I mean, what else could he do at that point. 

What to do instead: Make educated financial choices

We could argue about whether he needed the money but that’s a separate issue. What I want to focus on here is the idea of making educated, purposeful financial decisions.  

My dad wasn’t struggling financially, but he worried — in the same way so many clients who come to me are worried. It’s common to feel a nagging uncertainty about whether there’s going to be enough money to last through retirement. Maybe a child born in the Depression can never totally get over the worry, but the best way to lessen it: Make educated decisions on purpose; don’t just wing it and hope for the best.

Taking these steps early-on will help you be more financially secure and feel more optimistic: 

1) Invest extra savings in broadly diversified mutual funds during working years.

2) Have a comprehensive financial plan, ideally one that’s continually updated and adjusted so you know you’re on-track for retirement.

3) Take Social Security at age 70 and invest that, too, especially if you keep working like my dad did.

What you can learn from this cautionary tale

My dad was a super-smart guy. He had a PhD. He was a Distinguished Professor. He was No. 5 in the world in the field of speech anxiety research. He was a member of Mensa.

But he didn’t know about money. He didn’t care to know. He lived in the world of ideas.

And you know what? I’m totally fine with that. Not everyone is interested in money; in fact, most people aren’t. That’s why my job exists.

What I’m not fine with is ignoring it. I know it’s hard to ask for help, especially when you’re used to being the smartest person in the room. But we can’t be experts at everything. Offer help in your field of expertise and accept help in other areas. Think of it as a way to take care of yourself and your loved ones. You can be a super-smart person and have a professional financial advisor helping you with your money.