Finance 101: The role of luck

Sometimes it just comes down to the vagaries of fortune.


“Of all the gin joints in all the towns in all the world, she walks into mine.”

–Humphrey Bogart, “Casablanca”

In what may be one of the most iconic scenes in movie history, Bogart’s character, Rick Blaine, laments his bad luck when his former lover, Ilsa, played by Ingrid Bergman, throws his life into chaos when she shows up in his club in Casablanca, Morocco, during WWII. She has with her her new lover who, quite inconveniently, is wanted by the Nazis. Bad luck for Rick. Casablanca was literally crawling with Nazis.

Whether we want to admit it or not, luck plays a big role in all of our lives. It is a mercurial force that finds its way into places we may never consider. And its impact is sometimes hard to fully appreciate. It’s good to be lucky, but you certainly can’t count on it. And let’s not underestimate how big a role luck plays in our lives. Both good and bad.

Take, for instance, when you were born. If you were born a thousand years ago, you were lucky to live to your mid-thirties, and probably saw half your children die, along with a spouse or two. It was a good day when you had enough to eat before sleeping on a scattering of hay.

In our modern times, how well-prepared you are for your retirement years is also heavily influenced by luck. If you started investing for retirement in the ’70s, and retired after 30 years, you were paid abundantly. And you might have had a pension to boot. But if you started in the late ’90s, you saw two huge drops in the market in just one decade. If you had the discipline to stick with investing, then you have recovered, but your returns have been paltry compared with the previous era’s. If you got scared out of the markets and never got back in, well, then you are probably not happy. And have far less money.

Literally, when you were born greatly influences how well you may do, based on the attainable opportunities that exist in your personal era.

How about the circumstances into which you were born? We have no control over that. But if you were born into a financially stable and strong family? Well then, for all intents, your odds of financial success and well-being are pretty high. Which doesn’t mean it’s a guarantee, but the odds are quite in your favor. That’s usually pretty good luck.

Contrast that with a child born to a single mother. A single mother who already has two children. A household where money will always be very tight, and luxuries like college simply aren’t even in the realm of discussion. In that circumstance, the odds are poor that this child will be able to get ahead in life and be able to become financially well off. It certainly doesn’t mean your die is cast, and you have no chance, as there are thousands of Horatio Alger success stories we have all heard, which is good. The problem is that poor people who stay poor — which is mostly what happens — get zero press and recognition. So bad luck tends to fall on lots of good but financially challenged people.

How about what gender you were born? And before I get to my point regarding luck and its implications, let me state categorically, being born a woman isn’t bad luck any more than being born a man is good luck, in the typical sense. But the fact remains, women are generally less well-prepared for long-term financial success than men are, due to conditions beyond their control. Child-rearing duties still fall most heavily on women, which means they spend more time away from work. Women frequently pursue jobs with more flexibility, and lower pay, so that they can be there for their kids and related activities. And don’t get me started on if a divorce happens.

The reality is that women save approximately half as much as men, and fully half of women have no savings vehicle to save for retirement. These figures come from a recent study by Student Loan Hero. What makes this even harder is that women have to save for an average of six to nine more years of living. And yet it is better today for a woman than it was a hundred years ago, never mind a thousand years ago. But many challenges still remain.

When people do well, we most often attribute it to things like skill, intelligence, and hard work. And those things are very important to success, and should be encouraged, but they are also greatly enhanced when luck is on your side. I think we should recognize that when people fail to save enough for their older years, there is frequently bad luck involved. And conversely, when people succeed, there is frequently good fortune to thank. While that may grate on certain sensibilities, it is also true. Perhaps we should be more cognizant of your favorable situation, and perhaps more understanding of those who don’t have the same conditions.

But people, regardless of their conditions, still need to control those things they can, like simply starting a plan and taking steps to start saving, and accept that there are many larger factors that they can’t control. Things like the era in which they were born, the family into which they were born, and the biological role of gender. Without this plan, how the markets may or may not perform, your family’s financial stability, and even your gender become irrelevant.

And make no mistake, the world in which we live is getting demonstrably better, but our lives will always be subject to the vagaries of good or bad fortune. It needs to be recognized in order for us to have a better understanding of ourselves and the people who aren’t like us. Recognition is a pretty decent start.

John Kageleiry is a business writer and financial planner. Have a question for “Finance 101”? Email it to