For many, it's not always easy to save for retirement because it's so far away it's not urgent.
New research suggests a solution: make the future feel closer.
“People struggle to save for the future and this is part of why people struggle to connect with the future,” says Catherine Christensen, an assistant professor at Indiana University and the lead author of the study. “Based on past research, if people feel more connected to their future selves, is it more likely they'll save them?”
After conducting and analyzing a series of 20 experiments to test this hypothesis, Christensen says the answer is yes.
Research shows that when you think about the future, you start by thinking about the present at more than 80% of the time.
“What we did is essentially turn it over,” Christensen says. Before you can bring your thoughts back to the present, you begin the thought process by imagining that future and the savings goals you need to achieve it.
This Midwest state is considered one of the best places to retire, according to a new survey: See the list
The difference is subtle, but it has been shown to motivate people to save more. In one experiment conducted by a research team with over 6,700 clients from a Swedish fintech company, people with unbalanced savings accounts were 14% more likely to invest in long-term savings products when they received notifications in languages that encourage them to think about the future.
Hal Hershfield, professor of marketing, behavioral decision-making and psychology at the University of California, Los Angeles, and one of the authors of the study, says the prompts were intentionally designed with simple language. “[We] “The year is 2034… it's rewind to 2024 and consider savings in 2034,” he says.
The study was tailored to provide insight into how institutions like banks can save more to their customers, but Hirschfield says individual savers can apply their findings using similar language.
“The key here is to start and come back in the future,” says Hirschfield.
Social Security Payments for Public Pension Beneficiaries
The authors of the new study build on the hypothesis of previous findings that people perceive travel to unfamiliar locations as longer than return trips for the same period. In other words, we realize that we will return home faster than travelling to unknown destinations.
This cognitive habit occurs because uncertainty creates mental distance, Christensen says. In other words, people feel that things are unfamiliar and farther away than familiar. As scientists call it, this “home-going effect” applies to how we think about years and miles. This is where future events and life stages of savings will appear.
Politics should divorce from investment
You are likely to save a future that feels imminent, Christensen says. “We reduce our sense of uncertainty because the present is more certain than the future,” she says, by fixing subjects with familiar, real, spiritual destinations. “In our nudge, you basically move towards certainty.”
Click here to get your Fox business on the go
Martha C. White I am a business and financial writer in New York. She can be contacted at Report@wsj.com.
Copyright©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990CBE856818D5EDDAC44C7B1CDEB8
On March 10th, 2025, it was featured in a print version as “Setting savings goals by drawing the future.”
Document WP-WSJ-0002246561
