All the Tricks Your Brain Plays to Keep You From Saving
Our brains are complex things. So are our future lives. It can hard to even imagine our distant futures, much less prepare for them. That’s why so few people are adequately invested when retirement comes.
When that time in life finally rolls around, those of us who are unprepared usually wish that we had begun the process of saving much earlier in life, and worked at it harder and better. But knowing that this is how things often work out isn’t enough to make most young people start to make the changes they’ll need to be ready for retirement.
This is because there are many reasons are brains aren’t built to handle the future. For one, we don’t think about our future selves the same way we think about our present selves. We know this by looking at brain scans when people think about various topics.
When people think about themselves, for instance, a specific region in the front on the brain lights up in a way it doesn’t when we think about strangers. However, the same dim response is found when people think about themselves in the future, meaning that we think of our future selves almost like strangers.
This is just one example of the ways that we hang ourselves up planning for retirement. Prudential has identified a number of these. Alternative explanations include being exposed to too many retirement saving/investment options, avoiding procrastination in the wrong way, a visceral hatred of putting money away for a later use (registered in our brains almost just like pain), and the inability to exercise restraint.
Whatever your reasons for putting off retirement savings, Prudential counters these basic aversion mechanisms by increasing knowledge. They can help you prepare for your real future, using methods that the everyday person can handle.
Category: Family Finances, Financial Planning
