Can you daydream your way to a comfortable retirement? Or, more accurately, can the simple act of envisioning what your lifestyle will be like in your golden years help you to save more now?
The Capital Group recently commissioned a poll on American attitudes towards saving for retirement that doubled as a thought experiment.
Pollsters hired by the financial services firms used an online survey to explore the attitudes towards retirement saving on part of 1,202 adults who are the primary financial decision makers in their families.
The group was split in half, with both sides asked how much they wanted to save for retirement.
However, in a twist, half were asked to try and form a mental picture of the type of life they would like to lead in retirement before being asked how much they would like to save.
The results: Those who took the time to sketch a vision of their lives in retirement were more willing to save, to the tune of 31%.
The findings have struck a chord with financial planners, who say they use similar envisioning techniques to help their clients both save and plan for retirement.
"Begin with the end in mind," says Dennis Nolte, vice president and financial advisor at Seacoast National Bank in Florida and a CFP." "If you can see it, you can be it."
Leveraging the power of dreams
Planners say that getting clients to dream about retirement, or at least think about the later years in a detailed, positive way, can be a great motivator for encouraging them to save.
Patrick Huey, owner and principal advisor at Victory Independent Planning in Washington State, notes that simply bombarding clients with graphs and numbers is not the best way to motivate them to put money away.
Huey recently came out with a book on behavioral finance, "History Lessons for the Modern Investor." He notes the brain can struggle with rewards that are too far in the future, "sometimes known as temporal discounting."
Adults have also been taught for years, from the time they were children, to "shut down our imaginations, avoid daydreaming and to 'live in the now' especially when it comes to financial conversations," Huey notes.
"Getting people to save more for retirement is not merely a matter of showing them numbers or charts. They must relate those numbers to the story line of their future life," Huey says.
Michael Kelley, a CFP at Carver Financial Services outside Cleveland, says envisioning your life in retirement as a way of motivating yourself to save more now is like "quitting smoking, eating better, exercising more often."
A key part of changing those behaviors is developing of vision what your life will be like or become if you follow through with the steps needed to achieve your goals, whether it's feeling healthier, looking better or simply doing better at work.
"Planning for your retirement by envisioning what you want your retirement to look like, just like the other goals mentioned above, is what drives you to save rather than spend," Kelley says.
Thomas Scanlon, a certified financial planner in Manchester, Conn. notes elite athletes often use visualization to enhance their performance. Its use among Olympic athletes is well known.
"Read about elite athletes and many will discuss that they visualize the outcome," Scanlon says. "You don't however have to be an elite athlete to make this work for you. You can do this in your daily (yearly) life."
Filling in those crucial details
Still, planners aren't just telling clients to go gaze at the clouds in the sky and dream away.
Rather, most have a process for working with clients aimed at helping them flesh out the necessary details of their vision of what they would like life to be in their golden years.
Scott Bishop, an executive vice president for financial planning and a partner at STA Wealth Management in Houston, says simply saying "I want to be able to retire by 65," or "I want to save $1 million," isn't likely to provide the kind of day in, day out, motivation you will need to save consistently.
He works with clients to set concrete goals, like wanting to live in a house by a lake or take a vacation to a special country or place they have been dreaming about. Bishop suggests posting a picture of that destination - or for that matter a photo or picture of something that will remind you of your goal, whatever it may be - by your desk, along with a deadline, say retiring at age 60.
"Once you can visualize it, and where you can even see a picture on your desk...or better yet, even share with your spouse or children!" Bishop says.
Lee Dimon, a CFP with Bunting and Somma in Connecticut, notes it can be hard for people in their 30s, 40s and 50s to envision what life will be decades into the future.
It's the job of the financial advisor to help them flesh out their vision for life in retirement, Dimon says. That means talking to clients about what is important to them, their values, and what they would like to do after they retire, whether it is a second career or a hobby they have always wanted to devote more time to.
"We help them envision a later stage of life," Dimon says. "Thoughtful conversations can help uncover and prioritize."