Planning for the Future
Today, very few people take the necessary time to consider and plan for retirement until it is too late. Recent studies have shown that this may be due to the fact that young people have a difficulty visualizing themselves as elderly, which can limit the amount they may invest in retirement plans. Once the inevitability of age catches up with these people, they are often left with a savings that is inadequate to provide a reliable lifetime income.
Researchers at Stanford University have recently conducted a study that linked a person’s future self with his or her current self. This study encouraged people to visualize themselves in a few decades (in their 70’s, 80’s, and 90’s) through age-projecting photographs. Surprisingly, the study indicated that those who did this visualization were far more likely to take the essential steps to planning for later life. The research team found that test subjects who looked at a photograph of what they might look like down the road were willing to increase the amount they would save for retirement by 40% compared with those who did not see their future self.
One common explanation for why people tend to spend now rather than save for the future is that present needs are more concrete. The gratification in spending money on something we want now is greater than the perceived gratification of providing a stable future. Furthermore, it is hard to grasp the measure of your future needs because they are more vague and unknown.
Following the finding of this Stanford study we can learn that perhaps the key to staying motivated to save for the future is visualizing ourselves later in life. If we consider the specific things we may want and need as elderly people, we may very well be more inclined to save for those things than if we only considered hypotheticals.