What does money mean to you?

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

Spotlight: David Krueger

Stumped when it comes to retirement planning?

Maybe you don’t understand the secret language of money and the “money story” it has been trying to tell you since before you were born.

In “The Secret Language of Money: How to Make Smarter Financial Decisions and Live a Richer Life,” former psychiatrist-turned-executive coach David Krueger casts a clinician’s eye at our relationship with the green stuff to find out why rational people can act so irrationally about money.

Bankrate put Krueger on the couch to explore his thoughts on everything from Bernie Madoff to retirement income formulas.

At a glance
Name: David Krueger, M.D.
Hometown: Houston, Texas
Education: University of Texas; Louisiana State University School of Medicine; psychiatry residency at University of Colorado School of Medicine
Career highlights:
  • As CEO of MentorPath, an executive coaching practice, Krueger’s clients included CEOs of multinational corporations, best-selling authors and professional athletes.
  • Published 15 books, including “Making Memories: Reflections on Parenting from the Head of a Psychoanalyst” and “Success and the Fear of Success in Women.”
  • Serves as mentor coach and dean of curriculum for the Coach Training Alliance.
  • Practiced and taught psychiatry and psychoanalysis for 25 years.

You’ve written a book titled “The Secret Language of Money.” What’s so secret? We earn it, we spend it. End of story, right?

Yes! (Laughs.) Actually, money is so simple because it’s merely a unit of exchange. But at the same time, it is so complicated because it operates in our lives on so many levels that are emotional, unspoken and subconscious. The secret language is really the psychological and symbolic language that we use to make money say whatever we tell it to. Money speaks to us and we speak with money. It’s kind of a Rorschach; we imbue it with whatever values or meanings we want.

You refer to that relationship as our individual “money story.” Yet the problem seems to be that most of us have no clue what our money story is, much less how it’s going to turn out.

That’s true, in part because we are so close to it. Our relationship with money is the longest relationship of our lives. It began before we were born with our parents’ money stories, it ends after we are gone. The key is in how we craft that relationship ourselves. It’s important to get it right.

Research into money and its effects on the brain and human behavior has kicked into high gear recently as the fields of psychology, biology, physics and neuroeconomics converge. Where do you fit into the mix?

What I hope to do is bring those exciting discoveries together, synthesize them and apply them to strategic coaching. Put simply, I hope to help people learn how to change their money story.

One money story we have all been following is the Bernie Madoff scandal. Is that a textbook example of retirement investing gone terribly awry?

What can we learn from Madoff? There are dozens of money mistakes and financial fallacies that we embrace because of the way our brains work. One that applies to Madoff is exclusivity, the desire to be special or chosen. We often see this in scams. It takes a person who wants to be chosen, and that may vault them beyond common sense into an emotional choice. Madoff appealed to people’s desire for status by offering them membership in his exclusive club. He would turn down wealthy people. One investor said you had to go to him, he wouldn’t come to you, and the first few times he said, “Not yet.” Finally, when he did say yes, they would give him every penny.

Another factor is what psychologists call “transference fallacy.” He was believable as an authority figure. He was chairman of the Nasdaq. He was a philanthropist. He had a huge following. We tend to idealize people who portray confidence and manifest wealth, in hope we may participate in some of their glory. It’s the same form of social contagion that caused the market to lose $1.2 trillion last fall.

There’s also confirmation bias. We make a choice, then cherry-pick data to confirm that we made the right decision, obscuring evidence to the contrary.

Then there was good old garden-variety greed.

Absolutely. But greed has gotten a bad name. Actually, greed is a rapacious desire for more. It could be a passion; it doesn’t have to be a bad thing. But emotion and immediacy can trump logic and thinking. That’s one of the basic things we know from neuroscience — when there is an emotional response, the right brain can hijack and hold hostage the left brain, and reason, logic and long-term planning get trumped.

Did the nightmare on Wall Street lead many Americans to question their money story?

Exactly. So many people had done all the right things, made all the right moves and preparations, and still the rules changed. So there is a feeling of helplessness. And that helplessness creates fear and concerns and other things, all of which focus on money.

Take couples and relationships. There is so much focus and concern about money, and some of those issues really are about money. But many others are issues that hitchhike on money because money is something that is tangible, concrete and can represent almost everything.

Money is one of the two or three more common things that emotional issues hitchhike on. Others include food and sex. But money, I really believe, leads the way.

For baby boomers, the process of adjusting to the precipitous decline in their retirement savings has almost been akin to grieving for the loss of a child. They don’t know where to turn or who to trust moving forward.

It is a form of mourning, because when someone looks ahead, they have to give up the vision of what they had and where they thought they would be in order to assess where they are right now and create a new story going forward, based on different assumptions. If they are hanging onto that old story, hoping that something will change or hoping to recapture it, that takes energy and focus. That disallows someone from being solidly in the moment and making the choices that are best at this moment.

I had a client who could not get beyond the amount of money she had lost, probably 60 (percent) to 70 percent of her entire savings. She said, “If I sell, I will have lost all of that.” And I reframed that to say, right now, if you have $2 million, you have $2 million, whether that came from $50,000 or whether it came from $8 million. Right now, your choice needs to be fully on what you want to do with your money, and the decisions now and next.

You point out that we treat different categories of money differently. What are our blind spots when it comes to our retirement savings?

So much of retirement savings is focused on money. A true autonomy would be to not have to depend on anyone else in retirement, be it government, children or family members. Now, I know that’s ideal, but in addition to saving money, the best preparation for older years is wellness. Health and money; those are the two things I hear most consistently in terms of concerns for the future. There are ways to plan on a daily basis and have a daily commitment for wellness just as for money. You work out every day. The commitment is a decision you only have to make once and then it can be automatic.

One of the biggest disconnects we have about retirement income is that it seems to be working in two directions. After all, retirement is supposed to relieve you of the stress of working for a living. How do we change our money story to resolve that conflict?

I think the backdrop has to change. We’re not looking at retirement as all or nothing anymore. We’re looking at combinations and various permutations that are both necessary and desirable. One thing you could consider is that regardless of your money story, the one reality that money determines is choices. One way to think about that is to begin at the end, to envision what choices you want and back into that. When you visualize something, that creates a change in the brain; the same part of the brain lights up when you create a vision as when we actually see something. So when we revisit that vision, we etch it in our brain. So you can actually etch the experience of success and find a way to get there.

How do you recognize and change your money story when you now doubt your financial advisers?

I think the answer lies in the process of questioning formulas. Formulas may not work in the same way or apply to everyone. There’s not a formulaic answer. I think it is more an individual answer.

What it calls into question is really looking at planning and overcoming an optimism bias that we all have that things are going to work out, that we will get funded somehow and we’ll be healthy forever. It really calls into focus the need to realistically envision what life will be like between years 75 and 100, and where income will come from. Not to worry about it, but how to plan for it.

I think the increased life expectancy is causing some very different thinking about it. This is one of the reasons that wellness as well as money is so important, because health care can take up such a huge part of that, as well as feeling crisp and energetic day by day.

Is it time to simply retire the whole retirement model? Is it outdated now?

I believe increasingly it is, and will be. Probably something like transition may replace it, because there will be a transition rather than it being all or nothing for many people. Some of the very healthiest and wealthiest people say they don’t really plan to stop working; it’s something that is vital, that they feel energy for and they want to make a contribution.