Is Comparing Your Finances to the Average Person a Mistake? Yes. And It’s Costly.

 



Is Comparing Your Finances to the Average Person a Mistake? Yes. And It’s Costly.

Is comparing your finances to the average person helpful? No. The average saver is underprepared for inflation, longevity, and retirement costs. Using average savings by age as a benchmark creates false reassurance and leads to long-term shortfalls, even for disciplined high earners.

That is the starting point most people resist.

The issue with “average” is not that it is modest. It is that it reflects a population already falling behind. These benchmarks are built from households that save too little, start too late, and rely on assumptions that quietly fail over time. Matching them does not protect you. It delays the moment you realise your plan lacks margin.

This is why being above average is often mistaken for being safe. You may be doing better than most, yet still exposed to rising living costs, longer retirements, and inflation steadily eroding purchasing power. Financial security is not relative. It is absolute. Either your capital can support the life you want, or it cannot.

Retirement makes this impossible to ignore.

Pension balances that look respectable on paper rarely fund independence. They fund dependency. Most people who reach retirement with “average” pension wealth did nothing reckless. They worked, contributed, stayed invested, and followed conventional advice. What they did not do was build enough flexibility to absorb change.

This is where the damage accumulates.

Over time, inflation compounds, decisions are deferred, and the cost of adjustment rises. Options that once required small course corrections eventually demand structural change. In my work, I refer to this process as option decay. It is not caused by bad decisions, but by reasonable decisions left unchallenged over time.

Debt follows the same pattern. Many people focus on whether debt is manageable today, rather than whether it restricts future choices. A position can be affordable and still be strategically limiting. Lenders measure affordability. They do not measure optionality.

The real mistake is comparison instead of clarity.

Asking how you compare to others is a distraction. The only question that matters is what level of capital is required to support your lifestyle, protect against inflation, and preserve independence over time. That answer is personal, not statistical.

Structure, not sacrifice, is what closes the gap. Knowing what you own, how it behaves, what it is exposed to, and what it needs to deliver. Building a plan that allows enjoyment now without quietly trading away future choice. Financial planning is not about restriction. It is about control.

The average is a moving target, and it is moving in the wrong direction. We are spending more, saving later, and relying on systems under increasing strain. Following the crowd no longer leads to safety. It leads to fragility.

Average thinking produces average outcomes. And average outcomes no longer provide financial security. Time does not reward those who feel comfortable. It rewards those who stay deliberate.

Max Gerstein
Financial Adviser
Helping professionals and business owners protect what they’ve built, grow it intelligently, and make long-term financial decisions with clarity and confidence.

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