Would you put money away to bolster a stranger’s retirement account? Obviously not. For most people, our future selves is a stranger and for younger people, retirement (and retirement savings) is a theory so far in the future it becomes almost irrelevant.
But what if you could travel into the future and visit your future self? Would it make a difference?
Academics from UCLA, Stanford and Microsoft tried to answer this question by giving some people a picture of what they might look like at 65. They then asked two groups of people, one that got a glimpse of their future selves and one that did not, how they might spend $1000. Either buy a gift or do something fun on the one hand, or save for retirement or put the money in the bank on the other hand.
Turns out that people who were given a glimpse of their future selves were more likely to save the money.
One of the lessons from this experiment is the people relate to themselves, not to some generic picture of an older person. They also relate better to pictures rather than graphs and number.
Younger people are more likely to respond to the term financial freedom or quality of life than the term retirement. They also don’t believe that Social Secuirty will be around when they retire let alone getting access to a pension plan.
So not is it better for Millennials saving early when they are not burdened by big bills, they are less likely to complain about auto-enrollment and auto-escalation comfortable with decisions being made for them. They will also relate more to virtual reality and social media which means it might be a good idea to work with advisors and providers that offer these types of tools.
