A unique combination of psychology and technology might be just the ticket for getting investors to start taking their retirement savings more seriously.
Speaking last Monday at the InvestmentNews’ annual Retirement Income Summit in Chicago, Hal Ersner-Hershfield, a postdoctoral fellow and visiting assistant professor at Northwestern University’s Kellogg School of Management, illustrated how individuals generally take their future more seriously when they can imagine themselves as an older person.
SELF AS A STRANGER
“People tend to make decisions for immediate gratification because they are treating their future self as a stranger,” he said.Mr. Ersner-Hershfield used the example of a teenage boy smoking cigarettes because he is unable to imagine realistically the effects of long-term smoking on his body.
This is the same mindset, he explained, that helps justify why half the people in the country have just $25,000 saved for retirement and why a third of them have less than $1,000 saved.
To help remedy that gross shortfall in retirement savings, Mr. Ersner-Hershfield has developed a program that creates images of what people will look like in 30 or 40 years.
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