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Retirement planning: The root causes of procrastination and what’s being done about it
(BPT) - If you’re like many Amer- icans, retirement planning has not been a high financial priority. When life is busy and you’re shouldering the burden of looking out for the well-being of yourself and your fam- ily members, setting up a retirement plan is easily scuttled down the pri- ority list - especially if you’re hoping it will somehow be easier to make room for it in a year, two or more.
But if you look at the root causes
of inertia behind retirement plan-
ning, it’s clear how their effects on
your behavior can be much more profound. Here are just a few along with some insights and ideas to help you over- come these hurdles:
1. It’s overwhelming. Saving for retire- ment can feel open-ended and ambiguous, because it’s difficult to predict just how much you’ll need. Adding to the stress are the many hard-to-anticipate variables, in- cluding lifespan and future medical needs.
Don’t allow scale and uncertainty to block you, and start with near future planning. For example, decide how much you want in savings five years from now. Don’t forget to write it down. According to a 2015 study from Dominican University, putting your goal in writing makes you 33 percent more likely to accomplish it than allowing it to float in the realm of thought.
2. We can’t see ourselves as “old.” Re- searchers have found and verified repeat- edly that people struggle to identify with their future selves, according to a study published in the Journal of Marketing Research.
Make an effort to “meet” your future self, and that can influence you to make better decisions. It can be as simple as writing in a journal or having a heart-to-heart with your partner. Or, at the next get-togeth-
er with friends, play with a photo aging
app. Coming face to face with your future selves in this way is sure to launch lively, thought-provoking conversation.
3. The budgetary pressures of today. Families have other future needs to plan for, such as their kids’ college education or a down payment for a home. Add in the ongoing needs of day-to-day living, and it always feels like “the wrong time” to save for retirement.
As any experienced adult will tell you, it’s never the right time. If you have noth- ing saved, take that small step forward and set aside 1 percent of your paycheck in a retirement account. Or if you’re saving very little, boost it by 1 percent.
The push to make retirement planning more investor friendly
The good news is many financial com- panies and employers are acknowledging the barriers of retirement planning, which is why they’ve taken steps to make it easier for employees to plan and save for the future.
“Our benefits system is an enormous jigsaw puzzle, but in today’s world, we basically tell people ‘good luck’ in figuring this all out to create order in their financial lives,” says Harry Dalessio, who heads Pru- dential’s Retirement Plan Administration
Business. “Our benefits and retire- ment systems are really complicated, and they need to change. We need to make them simpler, more engaging and more valuable to employers and employees.”
Dalessio cites innovations of
the past decade, such as automatic enrollment, where new employ-
ees are automatically signed up in their company retirement plans.
As a result, companies have seen participation exceed the 90 percent level. Also, simplified products such as target date funds make it much
easier for investors to choose products at the risk level that’s appropriate for their age and goals.
Even with these changes, there is still ample opportunity to think bigger, and make retirement planning more accessible to employees, and even make them more excited about taking that step.For example, Prudential Retirement has created a series of interactive games that are featured at employee benefits events, with titles like Aging Booth and The Procrastination Quiz. These help employees see how the decisions they make today will influence their future security.
“Our sponsors tell us that these games are very helpful for helping people to see a future version of themselves, and by exten- sion take actions to plan for that future,” Dalessio says.
Bottom line, it’s not easy for the every- day person to wrap their minds around the importance of retirement planning - and how to begin. As more tools are devel- oped to make the future easier to envision and prepare for, the day may come where retirement planning comes easily and naturally to you and all workers.
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