Enhancing future self-continuity to improve retirement savings behaviour

Most of us are aware that we should save a portion of our incomes during our working years to fund our retirement when we no longer work to receive a steady income. In principle.


One of the main reasons for the low retirement savings is that “there is nothing left after living expenses have been incurred”. While this is a legitimate reason, the age-old economic saying that “human needs are insatiable” means that we will never have enough, therefore, even if we make more money, we will spend more and likely end up in the same situation we are in.

Studies have found that some retirees regret not saving more during their working years and would have saved more towards retirement if there were to be a second chance. However, in one study titled Saving Regret, the researchers concluded that it is easy for people to wish they had saved more; it takes no effort to regret it, compared to reducing consumption.

Results from brain imaging have shown that when we think about our present self, the parts of the brain that are activated are different from the parts that are activated when thinking about other people.

Since the hand of time cannot be reversed, to avoid saving regret, the question to ask future retirees is: will you reduce your current consumption to provide for a comfortable retirement? In this regard, action speaks louder than words, and the current low rate of savings means the answer to such a question is likely a resounding “no”. But why?

Studies have shown that we sometimes think of the future self as a stranger and when this happens, we tend to disregard its needs, pains and pleasures. How we perceive our future self, ie whether as a stranger or a close other, influences how we make decisions across time. According to Professor Allen McConnell, programme director at the National Science Foundation, the self is not a unitary entity. Instead, it is a collection of separate identities that, to varying degrees, overlap with each other over time. Therefore, future self-continuity, the subjective feeling of connectedness between a person’s present and future self, is influenced by time, so one is likely to be more in harmony with one’s potential self in the near future, than in the distant future. And if a person travels too far into the future, the psychological connectedness with one’s future self may be completely lost, and the future self will appear more as a stranger.

Results from brain imaging have shown that when we think about our present self, the parts of the brain that are activated are different from the parts that are activated when thinking about other people. The same parts that are activated when thinking about other people are also activated when we think of our future selves.

Dr Prince Sarpong, Senior Lecturer, UFS School of Financial Planning Law

The emotional disconnection with the person one will be in the distant future may explain why many people do not save enough for retirement. Studies on present-future self-continuity have revealed that when connections between a person’s current and future self are strengthened, temporal discounting reduces and saving increases.

In an experiment on how to increase saving behaviour, Professor Hal Hershfield and his colleagues invited participants to interact with realistic computer renditions of their future selves, and in all cases, those who interacted with their virtual future selves displayed an increased propensity to accept delayed monetary benefits over immediate ones. Exposure to one’s elderly appearance enhances the connection between the current and future self and improves the likelihood of planning for the future self.

The drive to encourage people to save towards retirement may be more successful if it also includes a strategy to enhance future self-continuity. Apps such as FaceApp, Oldify and AgingBooth can be used to improve the connection between the present and future self, to help younger people develop empathy for their 60-year-old or 80-year-old selves. This can engender the desire to save towards retirement to secure their financial future in retirement.