When asked, most people will automatically state that they want to live longer. Who wouldn't? Yet many people are anxious when considering this question. A recent study on this found that 70% of the people asked were concerned about what that meant for them financially. By the way, these were people that ranged from boomers to gen x'rs.
The interesting thing was how many people stopped to think about what they would differently when considering a much longer life. Over half the gen x'rs thought they should look at non-traditional career paths. For example, take breaks from work for volunteering or return to school to pursue a different calling.
This is where the respondents also stopped to think about how much they spend and how much they save. As many of us know, its hard to fund a 30 year retirement after only working 40 years. It's challenging for many young people to appreciate the need to begin saving for retirement when they're twenty something. They can usually see five, maybe ten years ahead. The idea of locking away their money for retirement 40 to 50 years in the future is a distant and abstract time.
It turns out there is a compelling method to bring these young people on board with retirement saving. It's simply to direct attention to the idea that their peers are doing it. It's amazing how influential your peers are. This is a very human characteristic and one in which we are all governed to a large degree.
Many companies today offer 401k plans with default sign-ups. While this is good, the defaults are not going to cut it in the long run. Instead, the message to the young worker should instead advocate a much higher than default percent. The message can simply state that most of our workers think contributing 15% (or some other plausible goal) is needed. With this nudge, more young people will get on board with their peers. Left to themselves though, the default is going to seem good enough.
The interesting thing was how many people stopped to think about what they would differently when considering a much longer life. Over half the gen x'rs thought they should look at non-traditional career paths. For example, take breaks from work for volunteering or return to school to pursue a different calling.
This is where the respondents also stopped to think about how much they spend and how much they save. As many of us know, its hard to fund a 30 year retirement after only working 40 years. It's challenging for many young people to appreciate the need to begin saving for retirement when they're twenty something. They can usually see five, maybe ten years ahead. The idea of locking away their money for retirement 40 to 50 years in the future is a distant and abstract time.
It turns out there is a compelling method to bring these young people on board with retirement saving. It's simply to direct attention to the idea that their peers are doing it. It's amazing how influential your peers are. This is a very human characteristic and one in which we are all governed to a large degree.
Many companies today offer 401k plans with default sign-ups. While this is good, the defaults are not going to cut it in the long run. Instead, the message to the young worker should instead advocate a much higher than default percent. The message can simply state that most of our workers think contributing 15% (or some other plausible goal) is needed. With this nudge, more young people will get on board with their peers. Left to themselves though, the default is going to seem good enough.
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