It’s hard to fight the lure of instant gratification. Even the best of us battle with putting off a smaller reward today so that we can enjoy a larger payoff in the future. We see it a lot with dieting. Dieters have the very best intentions of keeping their cravings at bay, but usually sooner than later, they succumb to that big old slice of pie. The instant gratification of that sugar rush is just more powerful than the delayed reward of a slimmer waistline. And we also see the same thing with money. The immediate pleasure felt when nabbing a sweet deal on a 55” LCD TV or when hanging with your friends on an indulgent night out can be far more seductive than the way-delayed gratification of retiring with a solid nest egg. And nowhere is this more apparent than with 20- and 30-somethings.
Try telling a group of people decades away from retirement that they need to defer spending today so they won’t end up surviving purely on Social Security benefits come 2050, and bets are, you’ll get a whole lotta resistance (and probably some eye-rolling, too). But if these Gen-Y’ers and Millennials don’t get a move on, the end result may be a generation seriously ill-equipped for retirement. And with two out of three early baby boomers missing the resources needed to maintain their lifestyle once they retire, this is a cycle that needs to be broken, pronto.
So what’s the best way to shake them out of their I’ll-never-get-old mentality? How about showing them pictures of what they’ll look like when they’re card-carrying members of the senior citizen set?
Sounds crazy, but researchers have found that when consumers identify with their future/older selves on a tangible level (as opposed to some hazy notion of themselves at 65), they’re far more likely to start saving. The researchers conducted a study using current-day photos of subjects, which were turned into virtual reality avatars. For half of the group, the face was digitally aged – adding a dash of grey here, a few wrinkles there – and the other half remained unchanged. Both groups then stared at the pictures of themselves for a minute, and were then asked the following question:
If you received an unexpected gift of $1,000, would you:
a) buy a gift
b) invest in a retirement fund
c) plan a fun occasion or
d) put it into a checking account?
Participants who looked at the aged version of themselves allocated more than double the amount of money to their retirement than the wrinkle-free group. That’s a pretty big shift in behavior resulting from just one small picture.
So why the dramatic change? One of the lead researchers believes it’s because we see our older selves as a stranger, someone with whom we can’t relate. But by seeing an actual aged version of ourselves, we develop greater empathy for who we’ll become in the future. The last thing we want is to be the one responsible for making life financially difficult for this older person – who just happens to be you. Plus, coming face-to-face with our older selves makes us face the fact that yes, everyone ages, and the sooner you start saving for your golden years, the better off you’ll be.
What do you think, Saver? Would seeing a 65-year-old version of yourself help you save for retirement, or would it just make you reach for the sunscreen?