Your parents probably had to call their financial advisor (which could have been your uncle Ted) or their banker to get advice or information on their retirement savings. They may even have had to drive to the bank or write letters with formal requests to get financial updates. Of course, they may have also just waited, sometimes impatiently, until they received their statements in the mail to learn how their investments or savings were doing.
HURRY UP AND WAIT:
While the idea of waiting for news on your finances may seem harrowing in today’s bustling, fast-paced market, few other options were available back in the days. For the anxious investor, the inability to get immediate or current updates on stocks or the market may have been nerve wracking. However, the lack of immediate access may have provided a layer of insulation from the apparent unpredictability of the financial realm.
The market has swung sometimes wildly up and down for more than a hundred years.1 Although the trajectory has moved mostly upward, recently reaching record highs2 , it has taken some dramatic dips at times, occasionally stirring fear and trembling in the casual investor. Some investment professionals may recommend certain individual investors take a more restrained approach to monitoring their portfolios to avoid making emotional “kneejerk decisions.”3 The exception: If your portfolio includes individual stocks, you may want to check more frequently. This avoids the bad habit of investing with your emotions.4 Connecting with financial professionals is an excellent way of maintaining your perspective and gaining a more informed view of the markets.
But once you retire, you need to know exactly what your retirement savings are doing and how they’re performing. You’re at an age where you understand the more rambunctious investment approaches may not be the wisest and, in fact, may be quite risky.
TOOLS, TECHNIQUES, AND TRENDS IN MONITORING YOUR SAVINGS
You have numerous ways to monitor your retirement savings, sometimes instantaneously
ONLINE APPS 5
The Internet provides reviews on the top budgeting tools and apps to monitor your finances and your retirement savings. Budgeting apps on your phone allow you to implement strategies that help you eliminate debt, monitor your credit rating, and view your retirement savings account. Most online budgeting tools require you to link your bank and credit information. Most apps institute strict security measures to protect your personal information. Read the terms and conditions prior to using financial and banking apps. One of the simplest, and perhaps most old-fashioned, tools for good money management is a spreadsheet. Although spreadsheets don’t come with all the fancy technological gadgetry, they do the trick, giving you the ability to track your investments, income, and expenses.6 Excel7 and Google Sheets8 provide free budget templates.
ONLINE BANKING 9
Most banks and credit unions provide online services that enable you to conduct most of your banking on your computer or your phone. Most online banking services are free. Here are some services banks can provide online: You can open checking, savings, and other accounts without having to sign or print documents. Electronic signature capabilities streamline the new account process, which may take less than 10 minutes. You can pay bills automatically. Bill pay allows you to make one-time or regular payments to service providers or even individuals. Your bank either sends checks or electronically wires payments. You can transfer money from checking to savings accounts or certificates of deposit. You can even transfer money to individuals. You can apply for loans with online banking. Institutions can do credit checks, and many lenders conduct the entire process online, rendering nearly immediate decisions on loan applications. You can sometimes find more competitive rates and benefits at online banks. However, shop around and do the research. Online banks have advantages, but you lose the access to human tellers you would get at brick-and-mortar institutions. You can deposit checks with the remote check options. You take a picture of the check and send it to your bank for deposit. You can get ongoing updates on the status of your bank, savings, and retirement accounts through text messages or emails. You can view transaction histories of your accounts. How much was recently deposited in your accounts? How much did you spend in the last week? Banks have made gaining access to transaction information easier.
NEW INDUSTRY FOCUS CATERED TO MELDING FINANCES AND TECHNOLOGY
As we approach the third decade of the 21st century, the financial and technology industries are tag teaming their ways to streamline and accelerate service delivery to their clients.
This trend aims at merging the financial sector with emerging technologies.10 Earlier, the term referred to technological developments that supported the commercial infrastructure of established financial institutions. Today its meaning has expanded to include innovations that foster greater financial literacy and enhanced retail banking and investing. Experts say developments in fintech will help empower retirees with more powerful technological tools to help monitor their retirement savings. “It seems like fintech has a lot of potential that is not yet very well put in place,” said Olivia Mitchell, executive director of Wharton School of the University of Pennsylvania’s Pension Research Council. “Retirement-focused people and people in retirement need more advice on decumulation, on tax harvesting, on how not to run out of money in old age. All of these are areas where fintech needs to move next.”11 Decumulation is the process of allocating your savings over. the projected years of your retirement. Tax harvesting involves selling securities at a loss to counteract capital gains tax liabilities.12 Recent developments in fintech include machine learning, artificial intelligence, predictive behavioral analytics, and datadriven marketing.13
Another developing tech trend that may make monitoring your finances and retirement savings easier and more precise is open banking. With open banking, banks allow companies to develop applications and services from data from the banks.14 Tech companies can use the data to develop more effective apps and interfaces between different financial platforms, such as investment portfolios and retirement savings accounts. Proponents of open banking assert the system will give us greater control over banking information and financial decisions. Opponents say it poses risks of data breaches and threatens privacy—factors advocates say will be overcome as enhanced technological safeguards are put in place.15
THE FUTURE OF FINANCE
Fintech and other technological innovations are increasingly becoming permanent features in our financial lives.16 Learning to implement and integrate these innovative tools could potentially make life easier and more manageable.
1 https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart 2 https://www.cnbc.com/2018/08/28/at-new-a-new-record-high-the-stockmarket-has-reached-its-now-what-moment.html 3 http://time.com/money/4213119/how-often-check-investment-portfolio/ 4 https://www.marketwatch.com/story/heres-how-stock-market-investorscan-control-their-emotions-2018-07-31 5 https://money.usnews.com/money/blogs/on-retirement/articles/2017-09- 08/5-ways-to-embrace-technology-to-manage-your-retirement-money 6 https://www.forbes.com/sites/robertberger/2015/11/19/7-budgetingtools-to-better-manage-your-money/#1a77b2094274 7 https://templates.office.com/en-au/Budgets 8 https://www.google.com/sheets/about/ 9 https://www.thebalance.com/what-is-an-online-bank-315204 10 https://www.investopedia.com/terms/f/fintech.asp 11 https://pensionresearchcouncil.wharton.upenn.edu/ https://www.thestreet.com/retirement/401k/how-technology-isdisrupting-retirement-planning-14606154 12 https://www.investopedia.com/terms/t/taxgainlossharvesting.asp 13 https://www.investopedia.com/terms/f/fintech.asp 14 https://www.cnbc.com/2017/10/02/fintech-everything-youve-alwayswanted-to-know-about-financial-technology.html 15 https://www.finance-monthly.com/2018/02/is-open-banking-really-safe/ 16https://digital.hbs.edu/editions/fintech/