Perception of age risks and strategies to encourage planning for the future

Symposium: Psychological aspects of risk perception and behavior. People struggle to be actively engaged in planning for their future and their life after work. One reason for insufficient savings rates is a general... [ view full abstract ]

Symposium: Psychological aspects of risk perception and behavior.

People struggle to be actively engaged in planning for their future and their life after work. One reason for insufficient savings rates is a general preference for immediate small rewards over delayed larger rewards, a typical human behavior known as temporal discounting. Temporal discounting may occur because the future option is imagined as more abstract, while the immediate option is imagined in more detail or can even be experienced. However, the longer people wait to make decisions for their later life, the greater the risk that they will lack financial security, health, and personal relationships to rely on. Based on possible selves and construal level theories, we conducted a study (N = 1989) to investigate people’s expectations and images of their life at age 70. We also explored the relationship between their responses and their retirement savings behavior. As predicted by construal level theory, the younger the participants, the more abstract they perceived age 70 to be. Positive aspects of older age were considered more often than possible risks, and people generally foresaw a bright future for themselves. Among perceived risks of older age, health issues were feared the most across all generations. At the same time, participants felt they could not avoid health risks. Social risks were feared more by women than men, and these fears declined with age. Financial risks were feared the most in middle age, but not often considered by the youngest and oldest. Those participants who had already started to save for retirement, however, had significantly more financial fears than those who had not yet saved. The “savers” also had a more concrete picture of their future selves at age 70; they perceived age 70 as closer, felt more connected to their future selves at age 70, and were generally more optimistic than “non-savers.” ”Savers” also described risks in a more concrete way and felt like they had more control over avoiding risks and achieving hopes. Our research findings suggest that information on planning for older age needs to go beyond simply presenting facts, but to support people in forming more concrete concepts of their own future and consider possible negative outcomes. By pre-experiencing the future in a similar way to how the present is experienced, future outcomes should be more comparable to immediate outcomes, which may decrease temporal discounting rates and encourage active planning.