The Biggest Risk To Your Retirement (Part 3) is You! With Dr. Daniel Crosby

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One of the biggest risks to your retirement is YOU.

When you let emotions get the better of you and make irrational financial decisions, you can easily derail your own retirement plan.

In this episode, Jeremy Keil speaks with Dr. Daniel Crosby, Chief Behavioral Officer at Orion Advisor Solutions and author of multiple bestselling books, about the importance of behavioral science in retirement planning.

Dr. Crosby discusses:

  • What retirees should (and shouldn’t) try to control during their financial planning
  • How to overcome the three biggest retirement mistakes
  • Situations where it is easy to get over-confident and make financial blunders
  • Why emotionally-driven decisions can lead to poor outcomes
  • And more

The Biggest Risk To Your Retirement is You!

During the podcast, Dr. Daniel Crosby discussed several psychological concepts to keep in mind when making financial decisions.

Read on to learn how these concepts work and their effect on decision making!

Learned Helplessness

When people continually try to control something that’s inherently uncontrollable, such as the financial markets, they put themselves through psychological stress.

After several failed attempts, they feel exhausted and ultimately stop trying.

This is called learned helplessness, which can also affect their ability to identify future opportunities.

However, it can be avoided by controlling only those things which you can control (for example, your diversification level, your spending, your risk level, etc.).

End-Of-History Illusion

One of the biggest mistakes retirees make is getting their retirement date wrong.

When we ask 55-year-olds about their plan to retire, they often mention 65 as their target retirement age.

But when the time comes, a lot of them end up retiring a few years early, which can significantly affect their retirement income.

This is often due to the end-of-history illusion, which clouds our long-term decisions.

Think about your 10-year-ago self. You’ll probably realize that your values and goals have changed considerably.

However, if you look forward 10 years from now, the end of history illusion suggests you won’t expect a major change and likely project your current likes/dislikes into your future self.

You likely think that what you want today is exactly what you’ll want in the future. This likely makes your retirement plans static and unopen for change. 

Just because you think you’ll retire at 65 doesn’t mean that you’ll stop liking your job or change your priorities and want to retire, or half-retire at 62!

Just because you can’t imagine living a full life at 90 doesn’t mean you shouldn’t plan for it!

But as Dr. Daniel Crosby said in the podcast, “We need to build retirement plans that honor this growth. Your goals may change. You, as a person, may change. And that may cause a change in your plan.”


When retirees read life expectancy figures online, they often start underestimating their own longevity and plan accordingly.

So, they might fail to consider the potential scenario of living longer than expected and outliving their money!

One of the biggest reasons why people get their longevity estimates wrong is salience.

The present seems more salient compared to the future. In other words, your image for tomorrow might be much more vivid than your image for 35 years from now.

An interesting study found that when people are shown renderings of their future self through an age progression software, they are more likely to save for the future! All of a sudden, the future becomes more salient and is no longer a blur image far down the line.

Tilting Probability in Your Favor

A huge lump sum amount today vs. a small monthly amount for the rest of your life — which one would you choose?

There is no clear-cut answer to this question. It depends on the math!

It’s easy to feel tempted to take the huge lump sum today and spend it on a luxury boat. But consider this: What if you or your spouse live until 100? You’d likely wish you had taken the monthly amount.

On the other hand, if you die early, the lump sum will turn out to be a better deal.

That’s why instead of speculating, you should aim to tilt the probability in your favor. When it comes to bid one-time decisions like Social Security and pension you can find your odds of success and take the odds that are in your favor! Look at the life expectancy tables and base your decision on where you can find the best odds.

Motivational Interviewing

We believe that a financial advisor’s job is to guide you, not make the decisions for you.

This style of guiding is called motivational interviewing.

Why is it important? Because when you arrive at the decision yourself and understand the reasoning behind it, you’re more likely to follow through that decision. It is key to positive behavioral change!

When an advisor is asking you questions and reflecting on your responses in a collaborative manner they are guiding you towards a decision that you feel confident in. We believe that when you know more about your money, you’ll feel more confident with your money and make better money decisions.


“You are susceptible to all of the same quirks and failings as the next person.” — Dr. Daniel Crosby.

Here, we are talking about the general tendency to be overconfident while making financial decisions.

Most people think they are “above average.” That is statistically impossible!

Another form of overconfidence is thinking that we know more about the future than we actually do. Believe it or not, the future is less predictable than one might think.

Finally, a third type of overconfidence is thinking that we are luckier than we actually are. For example, although divorces are extremely common in the USA, a majority of people will underestimate their chances of getting divorced in the future.

The rational thing to do would be to assume you are in the middle of the bell curve. If other people make dumb mistakes with their money, you are equally likely to make those mistakes.

Once you accept that, you might actually make better decisions!

Emotional Extremes

HALT (hungry, angry, lonely, and tired) is a common acronym used in 12-step programs to help individuals overcome addictions.

The idea here is that if you’re in a heightened emotional state (hunger, anger, loneliness, tiredness), it is not the right time to make a big decision.

This also holds true for investing.

If you’re super scared about the market, you should probably wait to make a decision until you calm down. If you’re super excited about an investment option, you should probably do the same – wait out the decision until your rational mind has time to catch up to your emotions.

Remember, good investing is about catching the market instead of trying to beat it. When you’re extremely happy or sad about the market conditions, you’ll likely end up making poor decisions.


To learn more about behavioral finance and how to make rational decisions, check out the resources below!

If you have any questions, feel free to contact us or our guest, Dr. Daniel Crosby, using the contact information provided below!


Connect With Dr. Daniel Crosby:

Connect With Jeremy Keil:

About Our Guest:

Dr. Daniel Crosby is the Chief Behavioral Officer at Orion Advisor Solutions. In this role, he is responsible for bringing behavioral tools, training, and technology to financial advisors to allow for the practical application of behavioral science. He is a psychologist and behavioral finance expert who applies his study of market psychology to everything from financial production design to advisor-client engagement. Dr. Crosby has more than 10 years of experience in the financial services industry and has published a number of bestselling books that serve as guides to building stronger advisor-client engagement with a focus on achieving better outcomes.



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