I was discussing the concept of retirement with several people half my age recently. Not only was the concept of little value to them in their current frame of mind, they saw it as a Wall Street notion to sell them something they may or may not need. This made me wonder if the brain was built to see the far-off distant future early enough to do something constructive about it.
The human brain is perfectly suited for future gazing and has evolved to do so. From the first instance of agriculture, when the first seed was planted systematically for the future nourishment of the group (about 10,000 B.C. in Syria), and if you and the unnamed author considered the events leading up to that moment, you woud have realized that we have thought about the future. Even planned for it.
But that was done for the future of the group. Retirement planning has been portrayed as an individual activity, devoid of any social context. And perhaps that is what is lacking. If we so anxious to share our personal lives via social media tools, why should our 401(k), IRA and related savings be less public? Would we do better if everyone knew how well we were doing with our investments in our own future and what the impact of not doing well would have on the whole group?
Because we see investing in retirement as a personal activity, we cannot project how what we fail to do now will affect those who did invest. In the agricultural example above, the whole group suffered as one unit if the crops had a bad year. This group suffering allowed us to endure better, plan more efficiently and ration our lifestyles in the present to accommodate the day when things would become more dire.
If the numbers concerning who and who isn’t using the company-sponsored plans are accurate with half of those who have access to 401(k) plans using them and 45 million households invested in an IRA of some sort, we have a huge problem as a group. We are programmed to see the future yet we are unable to understand it in large part because we are so consumed with the present. Even with incentives of company matches or tax breaks, too many of us are not involved in the thought process needed to achieve a better-lived future.
If people realized how little it took to invest in their future (as little as 5% pre-tax contribution would not have any effect in the net take-home pay of the in-the-present thinkers) would they see it as a reasonable? Of course they would.
The problem isn’t us; it’s them. Even for those of us who are in it, we don’t trust the process and can’t reason the risk. We don’t understand the need for a plan so therefore disdain the idea. My guess is there were quite a few harsh winters in our ancestral past with huge portions of the group dying before someone said: “perhaps we should plan for this when the weather is nice.” Plans are for disasters and in retirement, poverty is just such an event.
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