Conan the Barbarian. The Beastmaster. Thundarr.
If you know who all these characters are, then you are probably part of my generation. These were my three favorites as a kid and I loved the notion of the lone warrior a little gruff and rough around the edges, but a champion of the people. It is no wonder I named my future self, Conan. More on that in a moment.
Saving for the future is always a struggle for people. If only we followed our elders sagely advice and maximized our 401k at 18 years old and kept at it, but we don’t. Why is it we struggle so much to make do with less today to achieve a more stable future? One body of research would suggest, it is because we don’t know our older selves. These futuristic people are strangers to us.
Jamie Hopkins, director of retirement research at Carson Group wrote, “Research demonstrates that people think of their future selves as completely different people”.
In our practice we see this play out in many ways, from saving for retirement, asset allocation preferences, and making decisions regarding aging in place and end of life planning during retirement. Tomorrow is always a day away, but today we can make changes to our plan, just so we are prepared. How do we then envision our future and take pro-active steps today to secure a more stable and enjoyable future for ourselves, even if that “self” is a stranger right now?
One way would be to meet your future self. In June of 2013 the Harvard Business Review interviewed Hal Hershfield who is a professor of behavioral decision making and psychology at UCLA’s Anderson School of Management. When asked how they studied people’s response to saving and the future self, this is an excerpt of his response. “We took photos of our subjects and used software to create digital avatars – half of which were aged with jowls, bags under the eyes, and gray hair. Wearing goggles and sensors, participants explored a virtual environment and came to a mirror that reflected either their current-self or future-self avatar. Afterward, we asked them to allocate $1,000 among four options – buying something nice for someone special, investing in a retirement fund, planning a fun event, or putting money into a checking account. Subjects exposed to aged avatars put nearly twice as much money into the retirement fund as the other people”.
This is a fascinating concept. It also makes a lot of sense. Many others have had the same conclusions, “the Stanford Center on Longevity has identified key areas where Americans can take action to endure, they reach old age physically fit, mentally sharp, and financially secure” and “Research finds that connecting people to their future selves motivates them to engage in long-term financial planning…”.
Whether you are 25 and looking through your working years wanting to make positive pro-active decisions impacting your life for the better or a retired 70-year-old looking across the span of your last 30 years wanting to make good decisions to age in place – being able to identify with your future self has tremendous benefits.
These days you don’t need a fancy computer system or lab to achieve a view into the future, there are plenty of apps available to everyone which can give you that glimpse, such as FaceApp, Make Me Old, or Aging Booth, to name a few. Just type “Aging App” into your phone and see what you can find.
Another way to identify with your future self is to simply name that person. I went with Conan, kind of makes me feel cool. But when I bought long-term care insurance, I bought it for Conan. When I increased my 401k contributions or make extra payments on my mortgage, I do it all for Conan. He is a demanding partner in my life decisions.
Published in the US National Library of Medicine National Institutes of Health, Mr. Hershfield wrote, “What matters, for long-term planning, however, is that one person has but one identity, and it is with this link that the assets of the present and future selves are tied together. Individuals who feel as though the future self is a different person fail to acknowledge this connection, that is, fail to identify with themselves in the future.”
Naming your future self personalizes that person and links them to you in a friendly way. In fancy terms they call it “temporal discounting”, which means, we care less about the future than we do about today. Sarah Molouki wrote in her paper Increasing the Pull of the Future Self, “This widespread tendency to underweight the impact of future outcomes compared to present ones … can sometimes lead to serious costs”.
The connection can really be made any way it is meaningful for you, it should be personal. When I call my future self Conan, it makes me smile and I like that image. I LIKE making good decisions for that future self, and you should like making decisions for your future self too.
At TenBridge Partners we do financial planning which is exactly the process of looking into the future and making good decisions today to empower and enable our future selves to achieve the life we wish to have or secure the life we have now against future potential threats. The only impediment to making those good decisions is ourselves here in the present.
Please know your future self is a different version of you, but it is still you. Every year and decade we change. Our values, desires, goals, and everything changes. In a TED talk, Professor of Psychology Dan Gilbert from Harvard said, “all of us are walking around with an illusion, an illusion that history, our personal history, has just come to an end, that we have just recently become the people that we were always meant to be and will be for the rest of our lives”.
Because it is difficult to imagine tomorrow, we also discount the chances of it happening. When talking with a 70-year-old about modifying their home so they can age in place, they have a very hard time envisioning themselves needing these adjustments down the road. When we look at needing long-term care insurance, it is very hard for a 50-year-old to imagine their 85-year-old self and see a body in decline needing assistance. When we talk about retirement savings, it is very hard for a 30-year-old to imagine turning grey, wrinkling, and leaving the work force.
Professor Gilbert concludes by saying, “The bottom line is, time is a powerful force. It transforms our preferences. It reshapes our values. It alters our personalities. We seem to appreciate this fact, but only in retrospect. Only when we look backward do we realize how much change happens in a decade. It’s as if, for most of us, the present is a magic time. It’s a watershed on the timeline. It’s the moment at which we finally become ourselves. Human beings are works in progress that mistakenly think they’re finished. The person you are right now is as transient, as fleeting, and as temporary as all the people you’ve ever been. The one constant in our life is change.”
I love that.
Name your future self. Envision your future self and talk to them. Then let’s create a plan for your benefit now, but also for their benefit later. Because after all, you and they are worth it.
From the desk of Erik Lawrence CFP®
Hershfield, H. (2013, June). You make better decisions if you see your senior self. Harvard Business Review: Decision Making and Problem Solving. Retrieved December 2, 2021, from https://hbr.org/2013/06/you-make-better-decisions-if-you-see-your-senior-self
Hershfield, H. E. (2011). Future self-continuity: How conceptions of the future self transform intertemporal choice. Annals of the New York Academy of Sciences: Decision Making Over the Life Span, 1235(1), 30–43. https://doi.org/10.1111/j.1749-6632.2011.06201.x
Hershfield, H. E., Goldstein, D. G., Sharpe, W. F., Fox, J., Yeykelis, L., Carstensen, L. L., & Bailenson, J. N. (2011). Increasing saving behavior through age-progressed renderings of the future self. Journal of Marketing Research, 48(SPL), S23–S37. https://doi.org/10.1509/jmkr.48.spl.s23
Hopkins, J. (2019, June 20). How to get investors to save more for retirement? Perhaps by saying hello to their future self. CNBC FA Playbook. Retrieved December 2, 2021, from https://www.cnbc.com/2019/06/19/save-more-for-retirement-by-saying-hello-to-your-future-self.html
Molouki, S. (n.d.). Increasing the pull of the future self. The Decision Lab: Finance and Health. Retrieved December 2, 2021, from https://thedecisionlab.com/insights/finance/increasing-pull-future-self/
TED. (2014). Dan Gilbert: The psychology of your future self. TED Ideas worth spreading. Retrieved December 2, 2021, from https://www.ted.com/talks/dan_gilbert_the_psychology_of_your_future_self/transcript?language=en
Keywords: Financial Planning, Saving for Retirement, Better Financial Decisions, Planning for the Future, Financial Planner, Investing, Long-Term Care Insurance, Aging in Place