Not saving for retirement? Know your future self

It shouldn’t be a shock to hear that people don’t save enough for retirement. Americans are only saving 5 percent of their income, and that’s up from the typical 0 percent to 3 percent during the past decade. Yet 70 percent of us worry about retirement. See the contradiction? We are worrying about retirement, but not doing anything about it.

Most folks will say they simply don’t have enough money to put toward retirement savings. Turns out though that this is a bogus excuse as research is showing the real reason is actually psychological.

People can’t relate to being 70 or 80 years old. Their future self is some kind of stranger. In fact, when we think of ourselves in the future we actually use the same part of our brain that is used when thinking about a stranger.

Pretty cool stuff. Now we have a reason for not saving, but what can you do to fix the problem? The answer is to get to know your future self!

The easiest and simplest way is to “age-morph” a picture of yourself. The picture of the old guy in this article is actually me at age 70. The Reuben H. Fleet Science Museum in Balboa Park has this freaky machine that can turn anyone into a senior. There are also smartphone apps that do the same thing.

Seeing a picture of your future self helps the brain make a connection with that stranger. Once the connection is made, your behavior will change to help them. Research shows people save twice as much after viewing a picture of their older selves.

This totally makes sense to me and brings to mind a similar concept. Remember those Sally Struthers commercials with the starving children? It was heart-wrenching to see those kids. But then you see how happy the children are once they have food. Of course, you send money!

These commercials wouldn’t have been nearly effective if Ms. Struthers reeled off a list of statistics about children living in poverty. With pictures, you make a connection with the kids. They aren’t strangers any longer and you want to help.

It’s the exact same thing for your future self. That person is a stranger you don’t know or think about. Why give money to someone you don’t know? Almost everyone chooses to spend money on themselves rather than give it to a stranger. And that’s what retirement savings can feel like … giving your money away to a stranger.

But don’t let that happen! Get to know your future self. Age-morph a picture and set it as wallpaper on your smartphone. Think about the “future you.” What hobbies will “future you” have? What will “future you” like to do? Where might “future you” live?

Begin to get to know this stranger. You will discover that “future you” is a pretty awesome, amazing person. You’ll be motivated to help them by putting a little money aside. Then “future you” can enjoy life as much as you are enjoying it today.

Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.