Saturday, December 11, 2010

A Look Into the Future May Move You to Save More

One of the more interesting stories this week was one reported by John Berman and Jennifer Metz of ABC News with Diane Sawyer. It featured a virtual human interaction lab that offered a glimpse of what people will look like in retirement. (see ABC's Look into the Future)

The behavioral-finance researcher behind the work, Hal Ersner-Hershfield of Northwestern University's Kellogg School of Management, believes that a look into the future will give people the opportunity to see if they have saved enough for retirement. It allows people to develop empathy for their future selves. That connection with the future self makes future needs seem real and saving for retirement more necessary, he argues in the piece.

Ersner-Hershfield believes the connection is important enough to prompt him to develop a web-based tool and an iPhone app to offer everyone a glimpse of their future selves.

One can’t help but wonder what use insurers and their producers could make of this tool when they argue that a client needs life insurance or an annuity.

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