The Secret to Saving More: Picture Gray Hair?


If you’d like to retire early with a cushy nest egg, you might have to do more than just create a savings plan. In fact, the secret to getting richer may have as much to do with an Oprah-esque philosophy (visualize your dreams!) as it does with a Suze Orman one.

What does visualization have to do with saving?

Acccording to a new study titled, “Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self”, published in the Journal of Marketing Research in 2011, one of the reasons many people fail to save enough for retirement is that they have trouble visualizing what they’ll be like when they’re older. “To those estranged from their future selves, saving is like a choice between spending money today or giving it to a stranger years from now,” the authors write. In effect: We can’t relate to the person we’ll be 30 years from now, so we aren’t that concerned with saving a ton of money for the future.

Gen X and Gen Y need visualization more than other generations.

The problem with this, of course, is that it leaves us under-saved for retirement. Nearly two out of three Gen Yers (born 1983-1991) saved nothing towards retirement last year, according to a 2011 survey by Scottrade. Among those who do plan to save, the reality isn’t pretty: 21% plan to save only one to two percent of their income this year.

Gen X isn’t doing much better. Nearly half of the members of this group are at risk of not having enough money to maintain their current standard of living in retirement, even with Social Security factored in, according to a study by the Center for Retirement Research at Boston College. “Many people fail to save what they need to for retirement,” write the authors of the above study on increasing savings. This is especially troubling these days, “Since we’re living longer, we’re now at a greater risk than ever of outliving [our] money or undergoing a sudden decrease in quality of life,” they write. Translation: If we don’t save more for retirement, we’re going to be old and broke or, at the very least, working well into our 70s.

The key to staying connected to our future selves.

The question is: How do we reduce the disassociation between who we are today and who we’ll be in the future, so we can learn to save more? By visualizing our older selves, the study reveals. In the study, the authors showed  young people drawings of themselves that were “age-progressed” to make them seem much older. After being exposed to these drawings, the participants made “more future-oriented choices,” one of which was to save at a higher rate.

In fact, the subjects who saw drawings of their older selves contributed twice as much to their retirement accounts as those who were shown drawings of themselves as they looked in the present. These findings are bolstered by a 2009 study titled, “Don’t stop thinking about tomorrow: Individual differences in future self-continuity account for saving,” which found that the more connected a person is to their future self, the richer they tend to be.

Of course, you likely don’t have a drawing of your older self to stare at each day, but that doesn’t mean you can’t use the findings of this study to help you save more. Hal Herschfield, one of the authors of the study, recommends spending a few minutes visualizing an older version of yourself before you make major financial decisions, like how much to contribute to your 401(k) or how to allocate your investment assets. Not only should you think about what you’ll look like when you’re older, but “you should imagine the vacation you’ll go on, the time spend with grandchildren and other lifestyle things. It’s most important to do this before any big financial decisions,” he says.

“The Secret to Saving More: Picture Gray Hair?” was written by Cheap Chic.

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