10 Lessons I Learned From Star Wars About Retirement

A long time ago, in a galaxy far, far away…

When I was a kid, I loved Star Wars. Those movies became a source of optimism for me. Just like Han and the ragtag Rebellion, many of us dream of a victorious retirement – a time of freedom and well-deserved relaxation. But let’s face it, financial realities can feel like the Death Star looming large, casting a shadow of doubt on our retirement plans.

Here’s the good news: retirement isn’t some mystical force. It’s a goal we can achieve with the right tools and knowledge. There is a lot to be learned from those Star Wars movies.

Our team at Physician On FIRE are diehard fans, so to celebrate, here are 10 Lessons I Learned From Star Wars about Finance and Retirement (#8 is my favorite).

1. “The fear of loss is a path to the dark side.” – Yoda

How Emotion-Driven Investing Threatens Your Financial Future

As we navigate the turbulent financial waters of 2025, Yoda’s ancient wisdom rings truer than ever. The VIX index, often called Wall Street’s “fear gauge,” has been fluctuating wildly, with many analysts predicting that market volatility will remain elevated throughout the year due to trade tensions, geopolitical risks, and shifting monetary policy.

Just as the Jedi Master warned his padawans about fear leading to anger and suffering, investors who succumb to emotional responses often become their own worst enemies, making fear-driven decisions that lead to inferior financial outcomes and diminished long-term wealth.

The Dark Side of Market Emotions: The Psychology of Panic Selling

Research from the behavioral finance field consistently demonstrates that investors make their worst decisions when emotions take control. During April’s market turmoil, we witnessed a perfect case study as the S&P 500 experienced extreme volatility, with the index hitting its lowest point in nearly a year while the VIX surpassed 50 points – a level typically associated with panic selling. When Trump announced his sweeping tariff plan, markets tumbled sharply, only to surge an hour later on rumors of a potential pause, before plunging again when those rumors proved false.

This roller coaster wasn’t driven by fundamental economic changes occurring within hours – it was fear, then hope, then fear again.

According to research from DALBAR’s Quantitative Analysis of Investor Behavior (DALBAR, a financial services market research firm), this emotional cycle consistently causes average investors to underperform the market. Their 2024 study found that the average equity investor earned 5.5% less than the S&P 500 in 2023.

The Imperial Tax: The Cost of Giving in to Fear

The new tariffs might raise concerns about your investments, but consider the concrete cost of panic: Trump’s tariffs are projected to increase federal tax revenues by $166.6 billion in 2025, amounting to an average tax increase of $1,243 per US household.

Yet for many investors, the self-inflicted wounds of fear-based selling could cost far more.

A 2023 analysis by Morningstar found that investors who moved to cash during the three worst market days of the 2020 pandemic crash and reinvested just one month later sacrificed approximately 15% of their long-term returns. Applied to the average Baby Boomer’s retirement savings of approximately $200,000, that’s $30,000 in lost future value – more than 24 times the average household tariff impact (this is a rough hyperspace jump calculation). 

Jedi Investment Training: Building a Fear-Resistant Portfolio

Just as Jedi training emphasizes emotional discipline, investors need strategies to overcome fear during market turbulence:

1. Diversification as Your Lightsaber: The current tariff situation demonstrates why diversification matters. While some sectors face significant headwinds (like automakers such as Stellantis, which announced factory closures and layoffs as it assessed tariff impacts), others have shown resilience or even gains. Gold prices, for instance, have surged in 2025 as safe-haven demand increased amid tariff uncertainty. A properly diversified portfolio includes assets that respond differently to economic events, providing balance during volatility.
2. Automated Investing as Force Training: Consider implementing systematic investment plans that continue regardless of market conditions. This strategy, similar to dollar-cost averaging, removes emotional decision-making from the equation. According to E*TRADE, automatic investment plans (AIPs) “tend to minimize the effect of market volatility on your portfolio” because when you set the frequency of your investments in advance, other factors like an asset’s price won’t influence your investing decisions.
3. A Financial Plan as Your Jedi Code: Just as the S&P 500 recently posted its longest winning streak since January while still remaining 10.07% below its February 2025 peak, markets often display contradictory signals. Without a clear plan, these mixed messages can provoke fear-based reactions. A comprehensive financial plan that accounts for your time horizon, risk tolerance, and specific goals provides a framework for making rational decisions regardless of market conditions.
   

The Wisdom of Master Yoda: The Power of Patience

Even though there were worries about new tariffs, the stock market has shown it can bounce back. After the initial bad news, the S&P 500 quickly recovered from around the 4800 point mark – a level that has been important in the past. This quick turnaround, along with a recent period of more gains than we’ve seen in a while, indicates that the market has some strength and hasn’t fallen apart, even though experts think we might still see some ups and downs in the near future.

This resilience mirrors historical patterns. Since 1950, the S&P 500 has experienced 36 corrections of 10% or more. Yet following these corrections, the market delivered positive returns 12 months later, approximately 85% of the time. Also, since 2008, one source indicates a median one-year return of 18.1% after the S&P 500 enters a correction.

Choose the Light Side of Investing

Fear-based decisions rarely serve your long-term interests. Instead of giving in to the dark side of emotional reactions, embrace the light side principles of diversification, discipline, and patience.

Remember, the current tariff situation, like all market disruptions, will eventually pass. Those who maintain their investment discipline through the turbulence typically emerge in a stronger position than those who surrender to fear. As another wise Jedi once said, “Your focus determines your reality.” By focusing on your long-term plan rather than short-term volatility, you create a financial reality built on wisdom rather than fear.

2. “Do or do not. There is no try.” – Yoda

Plenty of research shows that procrastination in some form plays a small role in why so many Americans have not saved enough to retire in the lifestyle they are accustomed to.

For some reason, there doesn’t seem to be too much urgency in saving earlier. According to a recent Bankrate survey, about 1 in 5 U.S. adults stated that not saving for retirement early enough was their biggest financial regret.

But there are other reasons Americans delay saving for retirement:

• • Inflation causes current expenses to rise.
  • Unemployment.
  • Student debt.
  • Poor spending habits.
  • They don’t know where to start.

Don’t let that be you. Take charge of your future – start planning for retirement today. The power of compound interest works wonders over time, so even small contributions early on can make a significant difference down the road.

The longer you wait, the harder it becomes to catch up. Remember, retirement planning isn’t about trying, it’s about doing. Take that first step today, and secure a future filled with financial peace of mind.

3. “Never tell me the odds.” – Han Solo

In this moment, Han Solo teaches us to be optimistic and never give up on our dreams of retirement. No matter how challenging things may seem, don’t give up. Are you an optimist or a pessimist when it comes to finance? As it turns out, your mindset does matter.

Why am I talking about optimism regarding investing and your quality of life, anyway? Imagine having a meticulously planned retirement – a dream investment portfolio – yet feeling constantly weighed down by the feeling of uncertainty and pessimism. Wouldn’t that joy be overshadowed by stress?

Optimism acts as a lens, coloring your perception of challenges and setbacks. It fuels resilience and fosters a sense of control over your life, ultimately enhancing your overall well-being.

An optimistic investor views market downturns and economic difficulties as temporary setbacks, not permanent roadblocks. They believe in the ingenuity of companies to innovate, solve problems, and ultimately generate profits. This optimistic outlook allows them to weather storms without knee-jerk reactions like selling investments at a loss.

They understand that buying low and selling high is one of the keys to financial success, and optimism helps them maintain the discipline to do just that. In essence, optimism acts as a compass, guiding investors toward long-term financial well-being.

In a bear market, a strong pessimist may sit entirely out of the market and refuse to buy in. A strong optimist may be too hopeful and buy while the market is still trending down. The investor in the best situation is the one who marries the two outlooks.

An investor with an optimistic mindset hopes that the bear will eventually become a bull and will have the resilience and patience to ride the market out. The same investor, having experienced failed trades in the past, takes the pessimistic strategy of hedging their bets.

The interesting thing about all of the above is that when we look at the data of winners and losers in the optimism and pessimism battle, there is a clear edge that optimists have over pessimists. But not by much.

Me? I would rather be an optimist and save myself the anxiety when things go to the Dark Side.

One last thing about optimism versus pessimism. Risk aversion is a real thing, and it can do a number on your mind. Make sure you make an objective self-assessment as soon as possible – so you can choose your investment vehicles wisely.

Just ask yourself: How much risk can I take? Will this investment keep me up at night? If so, do you have the stomach for those rollercoaster rides?

4. “The dark side clouds everything. Impossible to see the future is.” – Yoda

Uncertainty is everywhere. There is uncertainty in the market, real estate, foreign markets, the job market, etc. The best way to hedge against uncertainty is to be prepared.

Also, don’t be afraid to make changes to your retirement plan as needed. Here are some ways to mitigate the stress from uncertainty.

1. Creating and maintaining an emergency fund: About 6 months of expenses (not salary) to cover your basic costs. Adjust your calculations based on your lifestyle, debt, and loan obligations.
2. Diversify your investments: Diversifying mitigates against losses during periods of stock market and economic uncertainty.
3. Create a formal budget: If you can not measure it you can not manage it.
4. Regular financial check-ups: I find that tax season is a good time to review and get the vital signs of my household finances. Also, if your finances are complex, then you should consider a financial advisor.
5. Upskilling and adding a source of passive income or side gigs: Passive income can help mitigate the stress of financial uncertainty by providing a reliable income stream that can bolster your main source of income. A side gig can also help with financial uncertainty by providing an extra source of income that can reduce financial vulnerability.

5. “Luminous beings are we, not this crude matter.” – Qui-Gon Jinn

When it comes to retirement planning the first thing that comes to mind is: How much do I have to save before I retire?

Money, however, is only a small part of the retirement picture. To create a fulfilling retirement, we need to consider the deeper things that bring us happiness and a sense of well-being.

Saving money and investing money is only a road to your retirement destination. Traditional ideas of retirement include images of trips to exotic places and playing golf or pickleball.

But there’s an issue – what do you do with the hours you’re left with in the day?

A life of leisure, while novel, can get pretty stale and boring if there is nothing meaningful to fill in the gaps of your daily life.

A rich life can not be measured by your net worth and how much you have saved. What is your idea of a rich life? Once you have a clear idea, then your path to retirement becomes more meaningful.

Retirement can be fun for most people. A 2022 research study discovered that 53% of retirees rated their satisfaction with retirement life as high, with an 8, 9, or 10 on a scale of 1 to 10. Some reasons why retirement can be fun include:

• Freedom: You can do what you want, not what others want you to do.
• New projects: You can start projects you’ve always dreamed of, such as travel, hobbies, or leisure.
• Social activities: You can join clubs, explore new hobbies, or take up old passions like art or theater to keep you social and immersed in your local community.
• Time with loved ones: 76% of happier retirees spend time with loved ones.
• Exercise: 70% of happier retirees make sure to exercise.
• Travel: 62% of happier retirees said they travel.

6. “The dark side of the Force is a pathway to many abilities some consider to be unnatural.” – Chancellor Palpatine

Beware the Dark Side of Investing: Why Chasing High Returns Can Lead to Financial Ruin

Just as the dark side promises power at a terrible cost, risky investments with the allure of extraordinary returns can lead to financial ruin. Let’s explore the data and understand why staying on the path of prudent financial planning is crucial for a secure retirement.

The Temptation of the Dark Side:

• Get-Rich-Quick Schemes: The Federal Trade Commission (FTC) reports that Americans lost over $5.8 billion to investment scams in 2021 alone. These scams often promise unrealistic returns and prey on people’s hopes for a quick financial windfall.
• Unsustainable Investment Strategies:  Some may chase highly volatile assets like meme cryptocurrency or penny stocks, hoping to strike it rich. While these can potentially produce high returns, the risk of significant losses is also high. Even as we move into May 2025, the inherent volatility of the cryptocurrency market remains a key consideration for investors. While a 2021 CoinMarketCap report highlighted Bitcoin’s capacity for price swings exceeding 100% within a single year, this characteristic continues to be a defining feature of the asset class. Despite these fluctuations, cryptocurrencies like Bitcoin have shown staying power, generating considerable interest within groups like the Physicians on Fire membership regarding their potential as investments. However, the fundamental principle of maintaining a diversified portfolio remains paramount. Allocating a small portion of one’s overall investments to these digital assets, rather than concentrating holdings in a single, volatile area, is crucial for managing risk effectively. When you place all of your eggs in one basket then the risk profile escalates. 

The Data Behind the Danger:

• Long-Term vs. Short-Term Performance: Multiple sources confirm that the nominal (not adjusted for inflation) average annual return of the S&P 500 since its inception (or since 1957) has been around 10%.  This consistent, long-term growth is far more reliable than chasing short-term, high-risk investments.
• The Peril of High Fees: Many high-return investment products come with hefty fees. These fees can significantly eat into your potential gains, making it even harder to achieve the promised astronomical returns.

The Power of the Light Side (Prudent Investing):

• Diversification: Spreading your investments across different asset classes like stocks, bonds, and real estate helps mitigate risk. Even if some investments perform poorly, others might hold steady, protecting your overall portfolio.
• Compound Interest: Albert Einstein called compound interest the “eighth wonder of the world.” By consistently investing and letting your money grow over time, even modest returns can accumulate significantly.
• Financial Planning: A qualified financial advisor can help you develop a personalized investment strategy that aligns with your risk tolerance and retirement goals. And please be very selective of your financial advisor. Don’t just pull out your mobile phone and yell out “financial advisor!” and wait for an ad to pop up.

The Choice is Yours:

Just like the Jedi relied on wisdom and discipline, building a secure retirement requires a long-term perspective and a commitment to sound financial planning. Don’t be lured by the dark side’s promises of quick riches. Instead, embrace the light side of responsible investing and let your money grow steadily for a secure and fulfilling retirement. Remember, the Force (financial planning) may be with you, but ultimately, the choice is yours.

7. “I’ve got a bad feeling about this.” – Han Solo

As physicians, we use our instincts when we do not have enough data to make a rapid clinical decision. This is fine when a patient is crashing but we are trained to use best practices in these uncommon situations. However, this type of emotional decision-making falls apart in finance. Intuition tends to be wrong and unreliable as a basis for picking profitable investments.

Although our brains can demonstrate amazing analysis and intuition -they can be blinded by cognitive biases that darken our view much like Darth Vader’s mask. One example of a cognitive bias is called “herding bias” which describes the tendency to imitate the investment decisions of others. This is often at the expense of independent analysis or contrary evidence.

8. “The greatest teacher, failure is.” – Yoda

“We eat failure for breakfast,” is what my co-founder would say on those days when we would receive about 25 emails letting us know that we would not get investor funding for our healthcare startup, Alertive.

For entrepreneurs, resilience is an important outcome of repeated failure. Failure is the pressure that creates the beautiful diamond (resilience). Resilience is the ability to anticipate possible risks, cope effectively with unforeseen experiences, and adjust to those changes.

For you to be resilient, failure should be seen as an opportunity to reevaluate and reorganize your past decisions.

The result is that failure opens your mind to new opportunities and perspectives. By failing, you learn to speed up the process of learning and hence make your retirement plan better.

9. “I find your lack of faith disturbing.” – Darth Vader

How confident are you that your current retirement plan is leading you toward your goals?

There is some correlation between today’s financial behavior and your retirement outcomes. The amount of retirement savings can become a very large factor that drives confidence in one’s financial future. This isn’t surprising. Most folks generally save after all their bills are paid.

When individuals understand the direct impact of their saving efforts on their future security, they are more likely to feel assured and prepared for the challenges and opportunities that retirement may bring. This sense of connection and foresight empowers individuals to make informed decisions, prioritize long-term financial goals, and navigate uncertainties with resilience and confidence.

Once you accomplish the above and feel like you have a solid plan, then stay steadfast in your long-term strategy, resist the urge to make impulsive decisions, and have faith in the durability of your financial plan. Trusting in the resilience of your strategy can help navigate uncertainties and keep you on course towards a secure retirement.

10. “The Force will be with you. Always.” – Obi-Wan Kenobi

Even in retirement, you can still be guided by the Force towards financial security. The Force is strong with those who are prepared and who have a plan. By starting to save early, investing wisely, and managing your risk, you can ensure that the Force will be with you in retirement.

Here are some specific ways to use the Force to have a happy and secure retirement:

1. Start saving early.
2. Develop an Income Plan.
3. Choose the Right Investment Strategy for your risk profile.
4. Forecast Your Expenses.
5. Anticipate Healthcare Costs.
6. Implement Tax optimization Strategies.
7. Maximize your Social Security Income.
8. Finalize Estate Planning.
9. Have a plan to stay on track.

But Star Wars has taught us much more, including this:

Be flexible. Things don’t always go according to plan, so it’s important to be flexible in your retirement planning. Be prepared to adjust your plans as needed.

Don’t be afraid to ask for help. There are many resources available to help you with your retirement planning. Don’t be afraid to ask for help from a financial advisor or other qualified professional.

And lastly, enjoy your retirement! Retirement is a time to relax and enjoy the fruits of your labor. Make sure to make the most of it!

“May The 4th Be With You.”  -Physician On Fire

P.S. A really bad joke to commemorate this day…

A young Jedi Padawan rushes into Master Yoda’s hut, lightsaber glowing excitedly. Master Yoda, I’ve discovered a new investment opportunity with returns that are astronomical!

Yoda lowers his datapad, his brow furrowed. “Disturbing, this sounds. Remember, young Padawan, high returns often lead to a dark path. Fees, hidden costs, these are the dangers.”

The Padawan persists, waving a holoprojector displaying a flashy brochure. “But Master, it’s called ‘May the Fourth Be With You Money Multiplier! Guaranteed high returns by the fourth of May!’ They even have a picture of Chewbacca giving a thumbs-up!”

Yoda sighs deeply. “A clever trap, this is. Remember, young Padawan, always research your investments carefully. Keep reading those Physician On FIRE articles, you must. Impulse decisions, lead to a loss of credits they do.”

The Padawan ponders for a moment. So, you’re saying I shouldn’t invest based on catchy slogans and a Wookiee’s endorsement?

Yoda nods.  “Wise you are becoming. Always remember, young Padawan, a balanced portfolio is key. May the fourth be with you…and your well-diversified investments.”

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