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It's hard to save for retirement. It's hard to stick to a diet. It's hard to do anything for the future version of you. Why is that? Consumer behavior research has shown that people have a really tough time envisioning their future selves. They struggle to make decisions that will benefit them down the road because they can't see themselves in that future scenario. This has far-reaching consequences, affecting everything from retirement savings to paying off debt. In this article, we'll take a closer look at why this happens and how finance brands can use this knowledge to help their customers make better long-term decisions.

It's Hard To Connect With Our Future Selves

The average life expectancy in the United States is 78.79 years. We're living longer, so logically, we must be saving more for retirement, right? Nope. According to the U.S. Commerce Department, savings rates in the U.S. are decreasing. And a recent study by Fidelity Investments found that 55 percent of people aged 18 to 35 have put retirement planning on hold. So, why aren't Americans saving more for retirement?

One reason is that it's hard to connect with our future selves. It's hard to imagine ourselves 20, 30, or 40 years down the road. For example, in our Retirement Trend Report, participants who said they felt completely off track with their retirement savings owed it to present stressors—paying off debt and paying monthly bills. So, it can be hard for people to imagine the distant future when you're stuck with stressors in the present.

Our disconnection from our future self is multi-faceted, and there are various reasons for it:

  • We discount the future—We value immediate gratification more than long-term rewards.

  • We have a hard time imagining our future selves—We can't picture ourselves in the future (what we'll look like, what we're eating, how we're living), so it's hard to make decisions that will benefit us then.

  • We're bad at predicting how we'll feel in the future—We think we'll be more satisfied with our lives if we achieve our goals (but research shows that's not always the case.)

These factors make it difficult for us to connect with our future selves and make decisions that will benefit us in the long run. And it's not just retirement savings that are affected. This disconnection also has an impact on our health, our spending, and our debt.

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Our Future Self Is A Stranger (And We Don't Trust Them)

A major challenge with planning for our future is that we often see our future selves as strangers—and we don't entirely know if we can trust them. Neurological studies show that when we think about our future selves, our brains don't process them as us.

More than 100 brain-imaging studies suggest that when we think about our future selves, the same regions of the brain that light up when we think about strangers also become activated. This suggests that our brains see our future selves as people we don't know very well. And since we don't know them, we're unsure if we can trust them to make the best decisions for us.

As UCLA researcher Hal Hirschfield put it, "Why would you save money for your future self when, to your brain, it feels like you're just handing away your money to a complete stranger?"

This stranger effect and distrust of our future selves is one of the main reasons why we struggle with future planning. And it has far-reaching consequences on everything from retirement savings to health goals.

Consumer Behavior Research Reveals Only Half of People Think About The Future

We'd like to imagine that we're all long-term thinkers, but consumer behavior research suggests that's not the case. The first major survey of future thinking at the nonprofit Institute for the Future reported that 53 percent of Americans say they rarely or never think about the "far future" (30 years from now). Twenty-one percent said they imagine this future less than once a year, while 32 percent said they never think about it.

What does this say about how we're planning (or not planning) for our future selves?

Well, the less often people think about their long-term future, the less self-control they exhibit in planning for that future—be it retirement savings, voting, or making necessary health changes. On the flip side, those thinking about their future lives are more likely to be engaged in their communities and have a stronger sense of purpose.

So, future reflection positively impacts human behavior, but we often don't forecast a realistic version of ourselves.

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We Underestimate How Much We Change

Another problem we face when envisioning our future selves is that we underestimate how much we change over time. In one study, led by Daniel Gilbert, a psychologist from Harvard University, 19,000 people, ages 18 to 68, were asked to rate how similar they were to their past and future selves. The participants were asked to score themselves on various basic personality traits. The participants from all age groups indicated that, on average, they thought they had changed more in the past decade than they would in the next. People want to believe that they are the final version of who they are today, but that's simply not the case.

Researchers also found out that people also underestimate changes to their personal values, goals, and preferences. Gilbert reported, "What these data suggest, and what scads of other data from our lab and others suggest, is that people really aren't very good at knowing who they're going to be and hence what they're going to want a decade from now."

So, what does this mean for retirement planning?

This is a problem when it comes to long-term behavior, such as saving for retirement, because we often base our decisions on who we are today and who we think we'll be in the future, without taking into account how much we might change.

When it comes to retirement savings, people often think they'll be in the same job for decades or want to stay in the same industry or career field, when in reality, people change jobs frequently. People also underestimate how much their lifestyle will change and how much money they'll need in retirement. This means that people are often not saving enough for their future selves.

How can we overcome the disconnect with our future self?

By anticipating the future, we can make better choices today that will help us meet our long-term goals. We can't predict the future, but we can develop a better relationship with our future selves. Here are a few ways people can do this:

Face Our Aging Selves

Recent studies have shown that seeing a digital aged picture of ourselves can have a positive effect on long-term savings, such as retirement. In one experiment, participants who saw an aged version of themselves increased how much they planned to save for their 401(k)s from 5.2 percent to 6.75 percent.

Why does seeing a few wrinkles on our faces lead to retirement savings?

Seeing our future selves can help us connect with that person and make us more likely to want to take care of them. When we see an older version of ourselves, it's a reminder that time moves faster than we realized, and 30 years isn't that far away. This can lead us to want to make the most of our time and to take better care of our future selves. They are us, after all.

middle aged woman

Prospection Can Lead to Better Future Planning

What is prospection? It's the ability to think about the future and to imagine different future scenarios. We do it all the time but are not always aware of it.

For example, what do you see when you think about your future self? Do you see yourself in the same job, with the same partner, and living in the same house? Or do you see yourself as having a different job, being in a different relationship, or living in a new place?

All of these scenarios are examples of prospection. Overall, prospection encourages better decision-making and long-term planning. How we engage in prospection can also shape our future actions.

In fact, one study found that restructuring how people think about the passage of time until their retirement—in days rather than years—caused them to plan to start saving for retirement sooner because the shift in time perspective made the participants feel more connected to their future selves. The research suggests that even small changes in how we think about the future can significantly impact our long-term planning.

What does consumer behavior research into future thinking mean for financial brands?

The truth is, people are pretty bad at future thinking. If people are bad at future thinking, this means they are likely to make not-so-great decisions when it comes to financial future planning. This has significant implications for financial brands with products and services generally purchased to use in the future.

So, what can financial brands do to help their customers make better long-term decisions?

Develop Tools To Encourage Future Thinking

One thing financial brands can do is employ the power of prospection. Brands can help their customers think about the future and imagine different future scenarios. This connection can help customers connect with their future selves and make better decisions about their financial planning. For example, Merrill Lynch offers a retirement calculator that helps investors see how their current savings will translate into retirement income. Future-inspired tools can help people make better decisions about how much to save for retirement and when to start saving.

retired couple at home

Engage in Realistic Future Self Marketing

When companies approach marketing financial products, like investment portfolios or retirement plans, they often use images of people living in luxury in their golden years. While this may be an effective way to get people's attention, it doesn't necessarily lead to people making better decisions about their finances. These images aren't realistic and don't encourage people to think about their true future selves.

A better approach would be to use more authentic images that encourage people to reflect on where they see themselves in 10, 20, and 30 years. For example, rather than an image of a retirement home on a tropical island, financial brands could use a picture of a person in their 60s or 70s living in their own home, with money saved for retirement. This image would be a more realistic portrayal of what most people's retirements will look like—and it would be more likely to encourage people to think about their future selves and make better decisions about their financial planning.

The Takeaway From Future Thinking Consumer Behavior Research

While multiple studies show that people have a tough time when it comes to future thinking, there are ways financial brands can help their customers make better decisions. By understanding the psychology of future thinking, brands can better help consumers connect with their future selves and make more informed decisions about their financial planning.

Let's work together to help your brand find truths in places you wouldn't expect, to take you to places you never thought possible. Let's talk.