Boosting your retirement savings could be as simple as closing your eyes and imagining your golden years.
Folks who picture their retirement say they should sock away 31 percent more money compared with people who do not think about what their retirement will be like, according to a recent survey from investment management firm Capital Group.
About 1,200 American adults with a 401(k), individual retirement account or other savings were polled for the survey.
Half of the participants received a version of the survey that included the question, “What percent of income should people save from their paycheck in their retirement savings account?”
The other half received a different version of the survey. Before it posed that question, it prompted participants to imagine what they want their lives to be like in their 60s, 70s and beyond.
Specifically, this version of the survey asked respondents 15 questions about:
- Activities they expect to pursue in their 60s, 70s, 80s and beyond
- How retirement will be different for them than it was for older generations
- Their investment objectives
- Aging population trends
The participants who were simply asked for a retirement savings rate said people should save 16.2 percent of their paycheck in a retirement account, on average. The participants who were first prompted to think about their own retirement, however, said 21.2 percent, on average.
That’s an increase of about 31 percent for the folks who envisioned their retirement.
Among women, the increase was more pronounced. Women who were not prompted to envision their retirement said people should save 15.9 percent of their paycheck, while women who did imagine life in retirement said 22.5 percent. That’s increase of about 42 percent for women picturing their retirement.
Heather Lord, senior vice president and head of strategy and innovation at Capital Group, notes:
“The financial services industry sometimes accentuates worries and guilt to get people to pay more attention to planning and saving for retirement. Fear doesn’t generally work. We believe — and our survey shows — that imagining one’s later years is a powerful exercise that helps drive increased average savings per paycheck for retirement.”
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