This article offers general information for Kraft employees and retirees and should not be acted upon without obtaining specific advice from a qualified professional. The information is not intended as benefit, investment, tax, or legal advice, nor the solicitation for the purchase or sale of any security.

Making Judgments

Upon years of working with Kraft employees and retirees, we have identified several topics that may prove beneficial for you to understand.

• Behavioral retirement advice and what it is.

• Three highly uncertain historical timeframes.

• The brain's decision-making process.

• The role of emotional intelligence in better financial decision-making.

• Behavioral finance and the role of heuristics.

• How to modify behavior – the 4 Rs.

Extreme Turmoil

• We will be evaluating financial and retirement decision-making for Kraft employees during periods of extreme turmoil.

• Addressed historical time frames are comprised of events occurring in the past two decades: 

• 2000-2002 –The Tech/Telcom Bubble and 9/11

• 2008-2009 –The Financial Crisis and the housing bubble

• 2026-Ongoing–post-pandemic era and downturn

Decision-Based Finance

Integrates retirement planning and modern portfolio theory with recent findings in the fields of neuro economics and behavioral finance to achieve an emotional state for making better financial decisions.

 

Behavioral Finance Theory

• An emerging field confronting us with our deeply irrational selves

• The influence of psychology on the behavior of investors and it's subsequent effect on the markets

• Help to explain how we make choices and decisions

Conventional Financial Theory

Conventional finance is predicated on the belief that

• Both the market and investors are rational and unemotional

• Investors make decisions without being biased by emotions

• Investors have self-control and are not confused by cognitive errors and information processing errors

Behavioral Finance Theory

Traits of behavioral finance:

• Investors are treated as “normal” not “rational”

• Investors have limits to their self-control

• Investors are influenced by their own biases

• Investors make cognitive errors that can lead to wrong decisions

Three Uncertain Periods:

 

S&P 500 Index

• In US dollars. Represents cumulative total returns of a balanced strategy invested on the first day of the following calendar month of the event noted. Balanced Strategy: 12% S&P 500 Index, 12% Dimensional US Large Cap Value Index, 6% Dow Jones US Select REIT Index, 6% Dimensional International Value Index, 6% Dimensional US Small Cap Index, 6% Dimensional US Small Cap Value Index, 3% Dimensional International Small Cap Index, 3% Dimensional International Small Cap Value Index, 2.4% Dimensional Emerging Markets Small Index, 1.8% Dimensional Emerging Markets Value Index, 1.8% Dimensional Emerging Markets Index, 10% Bloomberg Barclays Treasury Bond Index 1-5 Years, 10% FTSE World Government Bond Index 1-5 Years (hedged), 10% FTSE World Government Bond Index 1-3 Years (hedged), 10% ICE BofAML1-Year US Treasury Note Index. Assumes monthly rebalancing. For illustrative purposes only. S&P and Dow Jones data © 2026 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. ICE BofAMLindex data © 2026 ICE Data Indices, LLC. FTSE fixed income indices © 2026 FTSE Fixed Income LLC. All rights reserved. Bloomberg Barclays data provided by Bloomberg. Dimensional indices use CRSP and Compustat data.

“When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion.”

-Dale Carnegie

Physiology of the Brain

• The human brain has not changed much in terms of size and weight

• More of history finds humans as hunter-gatherers and farmers

• Scanning the horizon for what might eat us was more important than evolving towards making complex financial decisions

• Our brains are designed better for these primitive tasks

The Three Sections of the Brain

Outer layer – rational center

It handles complicated, cognitive processes like objective rational decision-making; the cerebral cortex

 

Middle layer –the emotional center

The limbic system & the amygdala translates outside stimulus into emotions

 

Inner layer –habit center

Not thinking; we just do it automatically In addition to breathing & body functions, we form habits

 

Brain Anatomy

• Layers of the brain communicate via neural pathways and chemicals

• Emotions like fear and anxiety can be so powerful that they have the effect of disabling the rational center of the brain

• With stimulus, the brain processes emotions faster than a rational thought

• The quality of decisions is impaired when our brains act reflexively

Brain Tendencies

• Brains are better wired for survival than to deal with complex financial decisions

• The brain has evolved slowly and is better suited to life 10,000 years ago and is not suited to keep up with the changes of the last 100 years

• Technology makes it very easy to impulsively spend and invest. Two potentially dangerous things to do impulsively.

Brain Systems

Reward System

Produces Dopamine

• Chemical plays a role in motivational component of behavior, we sense pleasure

Danger System

Adrenal gland produces cortisol (stress) & adrenaline

• Preparing the body to fight, flight (flee the danger we are facing) or freeze

Emotional Brain

Stock market volatility

• While emotionally painful, is not life-threatening

• Our nature is to sacrifice the accuracy of our rational brain for the speed of the emotional brain

Greed ensues when the pleasure of making and spending money creates the desire for more

• This is how we can get a closet full of shoes

Adapting Your Brain

 

The Brain Can Be Changed

• We can change how we respond to financial situations

• Neuroscientists refer to the brain as “plastic”

• Neuroplasticity means we can create new habits so that when faced with challenging financial situations we can respond in ways that are in our best long-term interests

Financial Choices

• Most people do not like thinking about finances

• Retirement decisions are analytical, cold, and oftentimes abstract

• Linking financial decisions to a financial life plan helps people make decisions in the pursuit of a satisfying happy life after Kraft.

“Life is 10% what happens to you and 90% how you react to it.”

-Charles R. Swindoll

Emotional Intelligence

• The ability to perceive and control one’s emotions and use those emotions to guide thought and behavior

• Many experts suggest emotional intelligence correlates better to happiness and success than traditional IQ

IQ vs EI

• IQ = Brain Processing Power

• EI = Relating & Communicating with Others

• Book Smarts vs. Street Smarts

• Braininess vs. Savvy

Ei 4 Unique Skill Sets

• Self-Awareness

• Self-Management

• Social Awareness

• Relationship Management

Self-awareness is the First Skill Set Required for Achieving Ei

Noticing our emotions and giving ourselves an accurate assessment

• Pivotal to understanding ourselves

 

 

What is Mindfullness?

• Is a tool to help cultivate self-awareness

• Emotional self-assessment is easiest when we are alone, quiet, relaxed and inward

• Meditation can help cultivate this state

Being mindful benefits

• Shown to reduce stress and anxiety

• Helps us to accept our experiences

• Improves sleep quality

• Helps with better concentration

• Improves memory

• Cultivates greater internal optimism

• Engenders self-confidence and self-worth

Engaging in Mindfullness

• Focus on breathing, listening (scanning) to your body

• Notice thoughts without judgements

• Examine underlying assumptions and beliefs

• Connect feelings and thoughts for better decision making

Self-Management is the second skill set needed to achieve EI

• Use emotions to assist thinking, including changes to our environment

• Recognizing the role emotions play in decision making

• Investors with good self-management skills have an increased ability to monitor their emotions

• They can then be flexible and adaptable when responding to changing situations

Social Awareness is the third skill set in achieving EI

• The ability to identify and understand another’s emotions

• The nuts and bolts of financial planning and investment management are improved by effective and open dialogue

• Better communication improves outcomes

Social Awareness

• Having empathy and listening intently fosters self-reflection and openness in the listener

• Helps to be able to see others’ contributions and how to effectively build relationships

• Fosters better communication between partners/spouses

Relationship Management is the fourth skill set in achieving EI

Effective relationship management involves using EI in interactions to construct positive outcomes

• Inspirational leadership

• Strategic decision making

• Cultivating a team environment

• Consensus building

• Community connections and strong relationships

• Conflict management skills

Financial Self-Control & Self-Management

• Financial self-control recognizes that “things” do not equal happiness

• Wealth is income not spent, it is deferred consumption

• Material consumption can distract us from activities that do improve happiness and quality of life

• A simple lifestyle is much easier and less stressful to maintain

Heuristics

Emotional and impulsive decision making relies on certain mental short-cuts to make quick decisions

They rely upon people’s biases developed from:

• Life experiences

• Preferences

• Perspectives

Heuristics Very Commonly Biased

• They could lead to incorrect estimates and sometimes serious errors

• Used to simplify complex problems that might otherwise require more time and consideration

Recognize your Biases

• We all have mental biases; they are short cuts for the many thousands of daily decisions we make

• Some mental biases cause us to ignore key information

• Or attach too much importance to one piece of information

• Or encourage decisions that are misguided by biases

• These are entirely natural and unavoidable but the more skilled we are at recognizing these biases, the better our financial decision making

Four Kinds of Bias

• Self-Deception– Tricking ourselves into thinking we know more than we do

• We are closed off to information that we need to make an informed decision

• Simplification– We make shortcuts and oversimplify.

• Emotion– Decisions made when we are angry, sad, happy, etc.

• Affects the types of decisions we make

• Social influence – How we are influenced by others

Myopic Loss Aversion

• Most investors suffer from myopic loss aversion

• The tendency to compare the performance of their portfolio from the perspective of avoiding a possible loss rather than potential gain

• They have a greater sensitivity to losses than gains and a tendency to evaluate outcomes frequently

Don't Overthink

• Weighting past experiences too much in decision making

• Similarity of objects is confused with the probability of an outcome

• Using stereotypes that color decision making

In US dollars. Performance data is historical and does not predict future returns. Indices not available for direct investment. See index descriptions in the appendix.

Don't be Overconfident

• Putting too much emphasis on one’s predictive abilities and knowing what the future holds

• Illusion of control –people think they have control over a situation when in fact they don’t

Over-Confidence

• Timing optimism –where people overestimate how quickly they can accumulate wealth over time, overestimate security selection and market timing

• Desirability effect –when people overestimate the odds of something happening because the outcome is preferable to the alternatives “wishful thinking”

 

Nasdaq Composite: 2010-2026

 

 

Anchoring

• Failing to adjust to changing or new information

• Heuristic revealed by behavioral finance

• Rely too much on pre-existing information and first data points

Confirmation Bias

• Look for confirming rather than disconfirming evidence

• Looking for information that agrees with us (“echo chamber”)

Political Affiliation Influences Economic Perception

Percentage of U.S. adults who rate national economic conditions as excellent or good

 

 

 

Pew Research Center, July 2026, “Public’s Views of Nation’s Economy Remain Positive and Deeply Partisan.”

Heuristics Availability

• Describes the way in which people assess the probability of an event by the ease with which they can remember a similar event

• The more easily we recall something from memory the more likely it is to be true

• The common effect leads us to believe other people think like we do because our opinion dominates our considerations

Illusion of Money

• Investors think in nominal results without figuring in inflation

• They are making investment decisions while not looking at real returns

Bias Toward the Status Quo

• When forced to make a complex decision with uncertainty, people tend to procrastinate and delay their decision

• Often happens when it comes to saving for retirement

• Doing nothing is easier

The Narrative Fallacy

• Make a decision based on the way information is presented as opposed to facts themselves

• We love stories and we let our reference for a good story cloud the facts and our ability to make rational decisions

Emotions and Bias: A Dangerous Mix

How is Your Investor Psyche

Risk Tolerance

• People who are less worried when taking greater levels of risk are considered to have a high-risk tolerance

• People who are less willing to take risk are risk averse

Risk Capacity

• A person’s ability to take financial risk based on their financial resources

Financial Capability

• Defined as an individual's capacity based on financial knowledge, skills and access to manage resources effectively

Reducing Bias

• Decision readiness is impacted by fatigue, distractions, visceral influences and individual differences

• To reduce biases, we must modify the decision maker

• Spend time educating yourself, take an alternative view and use proven checklists

Life is Full of Unknown Variables

• There are many things we do not control and admitting this is a necessary first step in being able to plan for it

• We cannot know when our life or that of a family member will be significantly changed

• We cannot know when our employment will be disrupted

• We cannot know what is going to happen with the overall economy, stock/bond market, real estate

Planning for Uncertainty

• Most Kraft employees desire to make sense out of our lives, so we set goals

• Being deliberate about aligning values to goals helps keep us on task toward building a meaningful life

• Writing down goals enhances our commitment and makes us responsible for the choices we make

Researchers Say You’re

42% more likely to act on your goals if you write them down.

Certainty in the Face of Uncertainty

• There is no shortage of opinions and prognostications, and it is natural to want to know the future, but it is important to know that there is a certainty of uncertainty

• Manage resources in an “all weather” way and build in a “margin of error”

• Account for the certainty of uncertainty and reduce the temptation of trying to know the future will help to better manage the potential outcomes

How To Protect yourself

• Being extremely well-diversified across a variety of financial instruments

• Using debt only very prudently

• Use insurance to transfer some of the risks of uncertainty to an insurance company

• Have a financial plan but know that things will not go exactly according to plan. You’ll change.

Use the 4R's To Make Decisions from the Inside Out:

 

 

Why the 4rs are Important.

• We can better balance between the emotional and the rational sections of the brain:

• Emotions sacrifice accuracy for spee

• Rational thinking is more accurate but not quite as fast

• We are hard wired this way, but we can gradually change so we can make better decisions

Be Aware and Recognize

• Stop whatever you are doing to take notice of everything you are thinking, feeling and doing

• Pay attention to the objective facts surrounding the potential decision

Check Your Awareness

• When managing emotions, you begin with recognizing the role they play

• As we have learned, they are involuntary and come with physical sensations like heart rate, tension, sweat, etc.

• Recognizing this is the key

• The act of recognizing gives your rational logic side time to work

Looking back  

• What values are important and how should they influence the choice?

• What biases might be influencing the situation?

Be Aware and Reflect

• By increasing awareness of what we are experiencing and how we react to inbound stimulus it helps us perform better

• Changing the source of stimulation to something internal that is based on values helps logic take control from emotion

• Practicing being reflective is a good part of self-care and going about it intentionally works

Reflection Techniques

• Deep breathing is at the heart of most relaxation techniques

• Diffusing emotions happens only with several deep and slow breaths

• Reflect on the big picture of life, your values and economic reality

• Emotions make exciting opportunities and scary news developments fertile ground for bad decision making

• Know your big picture: Finances, Family, Goals, Health

• This helps make sure your decisions are not impulsive

Be Real

• Your ideas about the situation by stating the most positive, realistic outcome for the decision you are about to make.

Stay True to Yourself

• To create positive change, we must change our attitude rather than our circumstances

• Learning to look at things in different ways

• Admit, using our reflection about our habit patterns to see the big picture helps us to re-interpret whatever financial situation we are in

Stay Present

• Emotionally stimulating events tend to tilt ourselves positively or negatively and away from our usual rational mind

• Acknowledging that you do not need to predict the future to succeed financially is a valuable first step

Trust Yourself

• Most everyone has a baseline:

• Positive or negative

• Sense of well-being –thriving or struggling

• Our own view of our intelligence –high or low

• Optimists need to be careful because they get overconfident

• Pessimists tend to be overconfident that they know things will not work out well

• Both types trust their instincts

The 4 R's Responsivity, Recognize, Reflect and Reframe

• Make a decision that is consistent with your values and goals that are properly aligned.

• Responsible decisions aligned with our values

• The quality of our response is dependent on the quality of the first 3R’s

• Recognizing –What am I thinking and feeling?

• Reflecting –What biases do I have? What have I not considered? Who is affected and what are the consequences?

• Reframing –How realistic is this, and am I too positive or negative?

Financial Security and Sound Decision-Making

• Good financial decisions promote happiness

• When decisions are in alignment with values it can increase the chance of having a meaningful life

• Growing inner life capacities like love, generosity and empathy is better than acquiring more “things” in the external life

• Be satisfied with what you have, stop moving the goal post.

Values and Goals Alignment

• Aligning values to goals then to behaviors helps you create the best backdrop for finding financial meaning

• When we are in alignment, we are at our best

• It is an intentional process of doing things on purpose, with purpose

• Values are different for everyone

• They are an expression of what’s most important

• They are an attitude about your life

Behavioral & Goals

• Behavior puts the living into our values and goals

• Behavior is what we do including our thoughts, emotions and actions

• As we already know, emotions sacrifice accuracy for speed

• Thus, we must take time to reflect on our values

• Write down goals and behaviors that seek alignment between them 

Financial Satisfaction

• Having the correct amount in cash

• Having the correct asset allocation

• Feeling free from being debt-free

• Monitoring spending and establishing control

• Having clear communication with spouse or partner

• Investing in an active social life and hobbies

• Engaging in social spending versus consumer/materialistic spending

Financial Displeasure

• Sustained fear, stress and loneliness will alter biological systems and is bad wear and tear on the mind and body

• Sustained happiness is more important than how happy a person is on a single occasion

• Emotional vitality is having a sense of enthusiasm, hopefulness and engagement

• Negative emotions can harm the body

The Retirement Group is a nation-wide group of financial advisors who work together as a team.

 

We focus entirely on retirement planning and the design of retirement portfolios for transitioning corporate employees from Kraft. Each representative of the group has been hand selected by The Retirement Group in select cities of the United States. Each advisor was selected based on their pension expertise, experience in financial planning, and portfolio construction knowledge.

TRG takes a teamwork approach in providing the best possible solutions for our Kraft clients’ concerns. The Team has a conservative investment philosophy and diversifies client portfolios with laddered bonds, CDs, mutual funds, ETFs, Annuities, Stocks and other investments to help achieve their goals. The team addresses Retirement, Pension, Tax, Asset Allocation, Estate, and Elder Care issues. This document utilizes various research tools and techniques. A variety of assumptions and judgmental elements are inevitably inherent in any attempt to estimate future results and, consequently, such results should be viewed as tentative estimations. Changes in the law, investment climate, interest rates, and personal circumstances will have profound effects on both the accuracy of our estimations and the suitability of our recommendations. The need for ongoing sensitivity to change and for constant re-examination and alteration of the plan is thus apparent.

Therefore, we encourage you to have your plan updated a few months before your potential retirement date as well as an annual review. It should be emphasized that neither The Retirement Group, LLC nor any of its employees can engage in the practice of law or accounting and that nothing in this document should be taken as an effort to do so. We look forward to working with tax and/or legal professionals you may select to discuss the relevant ramifications of our recommendations.

Throughout your retirement years we will continue to update you on issues affecting your retirement through our complimentary and proprietary newsletters, workshops and regular updates. You may always reach us at (800) 900-5867.