30 years

A big part of being a financial planner is helping people overcome the natural human tendency to think in the short term. When we envision the future, the first image we think of tends to look pretty similar to the present. Our concerns for tomorrow are primarily influenced by what has happened in the recent past.

To make things worse, we often dissociate our current selves from their future versions. When I’m thinking of staying home and taking a nap instead of going to the gym, I have little empathy for the future me who wishes he had done more to lose weight before he gained a spare tire. When I give in to the urge to buy a new phone even though my current model works perfectly well, I don’t feel my later regret at having lived less frugally than I should have as if it were my own.

We can usually overcome these short-term biases in our thinking if we learn to recognize them and listen to other people when they point them out, but sometimes it takes a pretty large jolt for us to come to our senses.

Most of my clients are around my age, meaning that saving for retirement involves projecting out to a date more than 30 years in the future. Planning for such a long horizon means making broad assumptions about different factors such as life expectancy, price inflation, rates of return on investments, tax policy, and Social Security, just to name a few. What I never thought I would have to consider as a financial planning factor for my or my clients’ lifetimes is climate change.

Global warming as a public concern has a long history of taking a backseat to whichever more immediate issue is absorbing public attention. Terrorism, war, financial panic, and the neverending crisis of the current government fill the headlines while the heating of the planet continues apace, each year a little warmer than the last. Occasional and increasingly dire scientific reports are released into the news cycle and quickly forgotten. The coal and oil industries fight to keep our attention elsewhere, to be sure, but in truth they’ve never had to try very hard. The moment we read the words “by the end of the century” in a climate change report we make an obligatory Very Concerned Face, breathe an internal sigh of relief, and go find something else to worry about.

By now you’ve heard about the U.N.’s new report on climate change. It states that in 30 years at the current rate the increase in global temperatures will have real effects, on us, in the places we live. People living on coasts and in the tropics might need to entirely abandon their current lifestyles before then, and everyone else will have to deal with the other effects: extreme weather, higher energy costs, water shortage, mass migration, and much, much more. The message is clear: global warming is coming to my life, to my clients’ lives, and – if you’re younger than the average U.S. Senator, at least – to your life.

By the time my generation reaches “retirement” age (a term that may have little meaning by then), the world could look completely different. That dream condo on the beach might be underwater by then; a scuba trip to the Great Barrier Reef will likely be a dive through a submerged desert. What is financial planning even for at that point? It makes setting up a Roth IRA seem rather pointless when you don’t know if there will be anything left to enjoy by the time you can start withdrawing from it.

Just as we each need to overcome our innate human shortsightedness to make the decisions that will be best for our future selves, our future as a species depends on our society moving beyond the crisis of the week and devoting real resources to ensuring that we have a planet worth living on in 30 years. We can start by electing leaders who acknowledge reality and are young enough to have to reckon with the consequences of their policies. Then we can make choices in our own lives that reduce the output of carbon into the air – most of which are also beneficial to our health and our finances – like eating less meat, living in houses that aren’t too big for us, using bicycles and public transit, replacing electronics when they break instead of each time the newest version comes out, and so on.

Financial planners today are well-equipped to talk to clients about how to plan around the many factors that are largely out of their (both the planner’s and the client’s) control. I’m still processing the full meaning of this report myself, but on our current trajectory climate change is no longer something my profession can ignore. As a fiduciary advisor, I’m obligated to act in my clients’ best interests. I think it’s in all of our best interests to make sure that in 30 years we still have a planet worth living on.