References to financial instruments are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Investing in any security involves risk, including loss of principal. No strategy assures success or protects against loss, nor is past performance a guarantee of future results.
References to specific websites are for informational purposes only and do not represent an endorsement of the source company, its products or services.
The Center for Behavioral Finance is sponsored by Allianz Global Investors U.S. LLC and Allianz Global Investors Distributors LLC.
PORTFOLIO / PENGUIN
Published by the Penguin Publishing Group
Penguin Random House LLC
375 Hudson Street
New York, New York 10014
USA | Canada | UK | Ireland | Australia | New Zealand | India | South Africa | China
penguin.com
A Penguin Random House Company
First published by Portfolio / Penguin, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC, 2015
Copyright © 2015 by Allianz Global Investors U.S. Holdings, LLC
Penguin supports copyright. Copyright fuels creativity, encourages diverse voices, promotes free speech, and creates a vibrant culture. Thank you for buying an authorized edition of this book and for complying with copyright laws by not reproducing, scanning, or distributing any part of it in any form without permission. You are supporting writers and allowing Penguin to continue to publish books for every reader.
Excerpt from “Cat’s in the Cradle,” words and music by Harry Chapin and Sandy Chapin © 1974 (renewed) Story Songs, Ltd. All rights administered by WB Music Corp. All rights reserved.
ISBN 978-0-698-19585-1
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If you require legal advice or other expert assistance, you should seek the services of a competent professional.
ACKNOWLEDGMENTS
Writing books is typically something of a collective effort, with the author benefiting from helpful input and suggestions from many people. This one is no exception.
First, I should like to acknowledge the help of a wonderful group of academic advisers, which includes Richard Thaler, Daniel Goldstein, Peter Ayton, and, especially, John Payne, who can always be relied upon to see right to the nub of any tangled issue.
Dozens of financial advisers, and a smaller number of individuals on the point of retirement, provided invaluable insights based on their experience of the challenge of planning for retirement.
This book was developed by the Allianz Global Investors Center for Behavioral Finance and its skillful and enthusiastic team as part of a broader project focused on helping people make the most of their retirement years. Thank you Steve Shu, Kim Andranovich, Caitlin Ledwith, Namika Sagara, and, most of all, Cathy Smith, director of the Center. And thanks, too, to Brian Gaffney for his ongoing vital encouragement and support.
Last, but not least, it is my joy to thank my wife, Lesli, and Maya, our now-not-so-little girl, for their love and supportive presence through this intense book-writing process.
Title Page
Copyright
Acknowledgments
Introduction
STEP 1
Identify Your Goals
STEP 2
Discover Blind Spots
STEP 3
Prioritize Your Goals
STEPS 1–3 IN ACTION
STEP 4
Think Beyond One Future
STEP 5
Recognize the Limits of Forecasting
STEP 6
Consider the Perspectives of Others
STEP 7
Reprioritize Goals
STEPS 4–7 IN ACTION
Other Applications of the GPS Process
Summary
Afterword: Beyond Setting Goals
Appendix
Introduction
I am a behavioral economist with a bad back. (Don’t worry: This book is not about chronic back problems.) The problem with having a bad back is obvious: pain. The solution, however, is far less obvious. Fixing a bad back requires experimentation and the patience to figure out what helps relieve the pain and what doesn’t. Your doctors have to balance multiple competing goals: how to seek a reduction in pain with the fewest possible side effects at the lowest possible cost, not to mention the fact that medical treatments require personalization, because what works for me might not work for you and vice versa. Finally, a successful solution will most likely involve multiple treatments. Maybe you’ll need surgery followed by physical therapy, or medication and a new pair of shoes. It is often not the individual treatments that make the difference but rather the portfolio of treatments, including how to orchestrate their timing.
References to financial instruments are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Investing in any security involves risk, including loss of principal. No strategy assures success or protects against loss, nor is past performance a guarantee of future results.
References to specific websites are for informational purposes only and do not represent an endorsement of the source company, its products or services.
The Center for Behavioral Finance is sponsored by Allianz Global Investors U.S. LLC and Allianz Global Investors Distributors LLC.
PORTFOLIO / PENGUIN
Published by the Penguin Publishing Group
Penguin Random House LLC
375 Hudson Street
New York, New York 10014
USA | Canada | UK | Ireland | Australia | New Zealand | India | South Africa | China
penguin.com
A Penguin Random House Company
First published by Portfolio / Penguin, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC, 2015
Copyright © 2015 by Allianz Global Investors U.S. Holdings, LLC
Penguin supports copyright. Copyright fuels creativity, encourages diverse voices, promotes free speech, and creates a vibrant culture. Thank you for buying an authorized edition of this book and for complying with copyright laws by not reproducing, scanning, or distributing any part of it in any form without permission. You are supporting writers and allowing Penguin to continue to publish books for every reader.
Excerpt from “Cat’s in the Cradle,” words and music by Harry Chapin and Sandy Chapin © 1974 (renewed) Story Songs, Ltd. All rights administered by WB Music Corp. All rights reserved.
ISBN 978-0-698-19585-1
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If you require legal advice or other expert assistance, you should seek the services of a competent professional.
ACKNOWLEDGMENTS
Writing books is typically something of a collective effort, with the author benefiting from helpful input and suggestions from many people. This one is no exception.
First, I should like to acknowledge the help of a wonderful group of academic advisers, which includes Richard Thaler, Daniel Goldstein, Peter Ayton, and, especially, John Payne, who can always be relied upon to see right to the nub of any tangled issue.
Dozens of financial advisers, and a smaller number of individuals on the point of retirement, provided invaluable insights based on their experience of the challenge of planning for retirement.
This book was developed by the Allianz Global Investors Center for Behavioral Finance and its skillful and enthusiastic team as part of a broader project focused on helping people make the most of their retirement years. Thank you Steve Shu, Kim Andranovich, Caitlin Ledwith, Namika Sagara, and, most of all, Cathy Smith, director of the Center. And thanks, too, to Brian Gaffney for his ongoing vital encouragement and support.
Last, but not least, it is my joy to thank my wife, Lesli, and Maya, our now-not-so-little girl, for their love and supportive presence through this intense book-writing process.
Title Page
Copyright
Acknowledgments
Introduction
STEP 1
Identify Your Goals
STEP 2
Discover Blind Spots
STEP 3
Prioritize Your Goals
STEPS 1–3 IN ACTION
STEP 4
Think Beyond One Future
STEP 5
Recognize the Limits of Forecasting
STEP 6
Consider the Perspectives of Others
STEP 7
Reprioritize Goals
STEPS 4–7 IN ACTION
Other Applications of the GPS Process
Summary
Afterword: Beyond Setting Goals
Appendix
Introduction
I am a behavioral economist with a bad back. (Don’t worry: This book is not about chronic back problems.) The problem with having a bad back is obvious: pain. The solution, however, is far less obvious. Fixing a bad back requires experimentation and the patience to figure out what helps relieve the pain and what doesn’t. Your doctors have to balance multiple competing goals: how to seek a reduction in pain with the fewest possible side effects at the lowest possible cost, not to mention the fact that medical treatments require personalization, because what works for me might not work for you and vice versa. Finally, a successful solution will most likely involve multiple treatments. Maybe you’ll need surgery followed by physical therapy, or medication and a new pair of shoes. It is often not the individual treatments that make the difference but rather the portfolio of treatments, including how to orchestrate their timing.
