3 Ways To Adopt The Right Retirement Savings Behavior

&l;p&g;When it comes to retirement, we often don&s;t &l;em&g;behave&l;/em&g; right.

It&s;s not that we throw a tantrum when we see percentage signs or big numbers. The big problem is that we rarely have an emotional connection to them, so we don&s;t behave wisely.

I know. It&s;s hard to get attached to things like compound interest or expense ratios. They sound really dull, although they&s;re always important. Yet there is a way to better see numbers and save more for retirement.

&l;img class=&q;dam-image getty size-large wp-image-1132238755&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1132238755/960x0.jpg?fit=scale&q; data-height=&q;659&q; data-width=&q;960&q;&g; Getty

The National Foundation for Employee Benefit Plans &l;a href=&q;https://www.ifebp.org/pdf/ten-ways-behavioral-finance.pdf&q; target=&q;_blank&q;&g;recently published&l;/a&g; a mini-white paper on behavioral finance and retirement security. Although the paper was for 401(k) sponsors, there were some useful nuggets on improving savings behavior:

&l;strong&g;-- Frame how you will &l;em&g;gain&l;/em&g;, rather than lose by saving for retirement.&l;/strong&g; Not surprisingly, many see their monthly 401(k) contribution as &l;em&g;lost&l;/em&g; money instead of an investment in their future. Behavioral finance research suggests that we can &q;re-frame&q; how we see that contribution.

&q;Stress what could be gained or lost. A chief tenet of behavioral finance is that people are loss-averse. People are highly motivated to avoid what they consider a loss. In fact, losing hurts worse than winning feels good.&q;

How much will you gain at retirement by saving more upfront or when you get a raise? What will it mean in total dollars at the end of 30 years?

&l;strong&g;-- Ask About Success Stories.&l;/strong&g; Ask those who are comfortable in retirement how they got there. How much did they save every year? If we can model our savings strategy on those who did well, that makes a difference.

&q;When making choices, people tend to do what they think most other people are doing because they believe there is less chance they will make a wrong choice. They are also influenced by what they think is expected or socially acceptable.&q;

&l;strong&g;-- Envision Your Retirement.&l;/strong&g; Where do you want to be? What do you want to be doing? Have a picture of your lifestyle.&a;nbsp; If you have a distinct idea of your preferred retirement lifestyle, it will motivate you to save.

&q;Having a personal retirement picture helps people avoid temptations to spend today, which can derail their retirement.&q;

Still stymied on what to do? You can always work with a &l;a href=&q;https://www.napfa.org/find-an-advisor&q; target=&q;_blank&q;&g;fee-only financial planner &l;/a&g;if you need help. Even better, if your employer offers access to financial planners, you can start there.

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