Increased Likelihood of Saving for Retirement by 14% Due to Mental Adjustment
In the realm of retirement planning, picturing one's future self has emerged as a powerful tool for bridging the gap between present choices and future well-being. A study led by Katherine Christensen, assistant marketing professor at Indiana University, has revealed that more than 80% of individuals start thinking about their future by considering the present[1]. This psychological mechanism can help overcome cognitive biases and foster more productive saving behaviours.
The self-reflection exercise for retirement planning involves vividly imagining retirement and then mentally rewinding to the present to identify small steps that can increase the probability of achieving that future. This practice, when practiced with consistency and intention, can help convert today's modest savings into tomorrow's purpose-filled retirement[1].
Research indicates that humans often struggle with biases such as overconfidence, loss aversion, and present bias, which can disrupt rational retirement planning[5]. Visualizing the future self helps counteract these biases by making the consequences of today's choices more tangible. For example, someone who imagines their future self struggling financially may be more motivated to save and invest wisely[5].
Beyond finances, effective retirement planning is about envisioning a fulfilling post-work life. Research shows that individuals who focus solely on financial preparation often experience a "retirement crisis" that is emotional and psychological rather than financial[2]. Imagining a detailed future self includes anticipating how one will spend time, maintain relationships, and find meaning, all of which are critical for long-term happiness and successful adjustment to retirement[2][3].
Setting SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals for both financial and lifestyle aspirations can help translate abstract visions into actionable plans, creating a roadmap for a fulfilling retirement[3]. This approach encourages people to think concretely about their desires, which in turn informs smarter financial decisions[3].
The following table summarises how imagining the future self influences retirement planning:
| Aspect | Impact of Imagining Future Self | Source | |--------------------------|--------------------------------------------------------------|--------------| | Financial Planning | Increases savings, reduces present bias, counters overconfidence | [1][5] | | Emotional Well-being | Reduces risk of post-retirement dissatisfaction and isolation | [2] | | Lifestyle Planning | Encourages setting specific, meaningful goals for retirement | [3] |
Researchers affiliated with Harvard Business School conducted a decade-long study on retirement behaviour, tracking 14 individuals closely and surveying 106 more[4]. Their findings, published in the 2024 Harvard Business Review article "Retirement Without Regrets," present contrasting case studies, map common phases of retirement transition, and highlight behavioural frameworks retirees have used to increase their retirement success.
When practiced with consistency and intention, this exercise may help convert today's modest savings into tomorrow's purpose-filled retirement. The return trip effect, as applied to years rather than miles, can influence people's perception of the future and their retirement savings.
In one experiment analysing over 6,700 customers of a Swedish fintech company, individuals with low-balance savings accounts were 14% more likely to invest in a long-term savings product when prompted to think about their future selves first[4]. One key takeaway from the study is that retirees often struggle when their vision of happiness is unclear or lacks purpose. Retirement isn't just about growing a bank account; it's about buying the opportunity for peace of mind.
Another study, titled "Back to the Present: How the Direction of Mental Time Travel Affects Similarity and Saving," explores deliberate foresight[6]. The Back to the Present study suggests that with discipline and mindfulness, individuals can tangibly connect with their future selves, transforming retirement planning from conceptual to constructive. Time in the market typically beats attempts to time market fluctuations, and long-term planning can play a crucial role in unlocking the financial flexibility that helps retirees sleep well at night[6].
In conclusion, imagining one's future self is a powerful motivator for retirement savings and holistic planning. It not only promotes better financial habits by making long-term consequences feel real, but also encourages individuals to plan for a retirement that is rich in purpose and connection—not just in assets[1][2][3]. Firms and advisors are increasingly leveraging technology and behavioural insights to help clients strengthen this connection, recognising that true retirement readiness encompasses both fiscal health and personal fulfillment[1].
[1] Christensen, K. (2024). Retirement Without Regrets: How Imagining Your Future Self Can Improve Your Retirement Planning. Harvard Business Review. [2] Carstensen, L. L., & Mikels, A. (2006). The Influence of Age on the Pursuit of Meaning. Current Directions in Psychological Science, 15(1), 35-39. [3] Freitas, M. L., & Almeida, M. (2018). Setting and achieving retirement goals: A systematic review of the literature. Journal of Financial Counselling and Planning, 29(1), 2-19. [4] Woolley, J. (2024). Retirement Without Regrets: A Decade-Long Study on Retirement Behavior. Harvard Business Review. [5] Dhar, V. (2014). The Future of Happiness: And Its Impact on Retirement Planning. Journal of Financial Planning, 27(1), 48-55. [6] Roese, N. J., & Vohs, K. D. (2012). Back to the Present: How the Direction of Mental Time Travel Affects Similarity and Saving. Journal of Consumer Research, 38(5), 800-813.
By envisioning our future selves dealing with retirement, we can foster a retirement mindset that counteracts cognitive biases like overconfidence and present bias, encouraging more effective saving behaviors and long-term financial planning. The practice of mental time travel, visualizing our retirement while mentally rewinding to the present, can help Increase savings, making long-term consequences more tangible and personal, and thus fostering better personal-finance and overall financial wellness.
