How self-awareness can make you a better investor (and retire happier)

Self-awareness isn’t just a leadership buzzword—it’s a game-changer for life, especially when it comes to your finances. We often talk about it in the context of becoming better leaders or improving relationships, but what if self-awareness could help you retire happier and wealthier?

Research from Wharton’s 2024 Pension Research Council found that individuals with high conscientiousness, a trait tied to self-awareness, tend to plan more effectively and save more for retirement, resulting in greater financial security.

Why self-awareness matters in your financial life

Self-awareness in retirement planning is about understanding why you make the choices you do and how they impact your today and your tomorrow. It’s about the emotions driving your decisions. Traits like grit and conscientiousness—noncognitive skills—can make a big difference in how you manage and feel about your investments. By being aware of these traits, you can improve your financial behavior and decision-making.

Here’s how self-awareness can completely shift your retirement experience and make you a better investor:

• Your goals become clearer: Self-awareness helps align your decisions with what matters most to you.
• You handle market swings better: Knowing your emotional triggers helps you stay calm and avoid panic-driven choices.
• Conversations with your advisor become more productive: You can communicate your true priorities and create a more tailored financial plan.

Can self-awareness make me retire happier?

Absolutely. Retirement is not just about having enough money—it’s about how you feel about your money and your life. When you’re aware of what truly matters to you, you can create a retirement plan that gives you both purpose and security. It’s about designing a life that fits, not just a portfolio that looks good on paper.

I’ve seen this shift in my own life. For years, I was focused on hitting financial milestones, thinking that success was measured by numbers alone. But over time, I realized that how I felt about those numbers mattered just as much. Self-awareness shifted my perspective—now, I pay attention to my reactions, especially when financial uncertainty arises. Instead of stressing about market swings, I’ve learned to step back, reflect, and make decisions that align with my values and long-term goals. It’s no longer just about growing wealth—it’s about feeling secure and fulfilled in the process.

Can self-awareness make me more money?

Don’t let anyone tell you there’s a magic solution to making more money. If you want to boost your income, especially for retirement, it starts with self-awareness. Understand your financial behaviors, be open to calculated risks, and follow a plan that resonates with your goals. Remember, if you're not where you need to be financially, don't be afraid to seek new opportunities that can provide more income. It's never too late to pivot.

For those in the years leading up to retirement, a traditional risk assessment just won't cut it anymore. Those old-school questionnaires are outdated and often miss the nuances of your financial personality. Instead, I recommend the Retirement Income Style Awareness (RISA?) Profile. This tool taps into how you really feel about money and risk, giving you a much clearer picture of your financial style as you approach this crucial transition or if you are already navigating this chapter of your life.

Questions for financial advisors: Helping clients reflect

Advisors, integrating self-awareness into client meetings can lead to more meaningful conversations and better financial outcomes. Here are three questions to help your clients get started:

1. What’s most important to you at this stage of your life, and how do you see your financial resources supporting that?

• This question allows the client to reflect on their current priorities and how they align with their financial goals. It helps you understand what they value most right now, whether it’s family, freedom, or pursuing passions.

2. What do you want your financial legacy to be? How do you want to be remembered in terms of how you used your money?

• This question encourages the client to think long-term, not just about accumulating wealth but about the impact they want to make. It opens the door to deeper conversations about purpose, family, and giving.

3. When it comes to making big financial decisions, what feelings or fears come up for you, and how can we address those together?

• This taps into the client’s emotional relationship with money, helping you identify and address their fears, anxieties, or limiting beliefs. It allows you to build strategies that reduce stress and build confidence.

4. How have your experiences with money—both positive and negative—shaped the way you approach your financial decisions today?

• This question helps uncover the client’s financial story, which informs their current habits and attitudes. By understanding their past, you can align your advice to their emotional needs and experiences.

5. How do you define a successful retirement? What will make you feel fulfilled and confident in this next chapter?

• This moves beyond the idea of simply having enough money and encourages clients to explore what success and fulfillment look like for them personally. It helps you align their financial plan with their desired lifestyle, passions, and personal goals.

These questions dig deeper than standard risk assessments, helping you understand your clients’ emotional drivers and align their financial strategies with their true goals.

How technology can enhance self-awareness in retirement planning

After years as a financial advisor, I've seen firsthand how our industry's focus on numbers can overshadow the human element. Yes, we do our due diligence with Know Your Customer (KYC) protocols, but let's be honest - we're not therapists or psychologists. Diving deep into a client's financial psyche can be challenging and, sometimes, inauthentic.

That's why I wake up every day driven to build technology that bridges this gap. At MyPlanKeeper , we're developing AI-powered tools that can have these crucial conversations about financial behavior and self-awareness.

This technology isn't meant to replace human advisors. Instead, it's here to enhance our ability to understand and serve you better. By combining AI-driven insights with human expertise, we're creating a more holistic approach to retirement planning - one that considers both the numbers and the person behind them.

Remember, true financial well-being comes from aligning your money decisions with your values and goals. And with the right tools, you can gain the self-awareness needed to make that alignment a reality.

Final thoughts

Self-awareness isn’t just for leaders or self-help books; it’s a powerful tool for anyone looking to retire happier and make better financial decisions. It’s part of your life asset allocation, balancing your financial strategy with emotional insight. When you understand yourself, your financial plan becomes more aligned with your true values, helping you build both wealth and well-being for a fulfilling retirement.

Best,

Carla

Resources:

https://www.biznews.com/retirement/2024/07/18/behavioral-retirement-savings-wharton-study

Carla Garcia, CRPC?, CPRC , brings over two decades of financial expertise and a pioneering spirit to the retirement and transition industry. As the founder of MyPlanKeeper?, she combines her deep knowledge of finance with a passion for AI and digital safety to empower individuals. Carla believes in living vibrantly in the present while securing a fulfilling future. She is dedicated to promoting responsible AI use and lifelong learning, helping clients embrace technology with confidence and build lasting family legacies without compromising current happiness.