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Meditations On Marshmallows And Retirement

 May 15, 2012 01:17 PM

(By Nilus) If you want to hear scary stories related to retirement, you don't have to look very hard.

For example, a trade association for the financial services industry called LIMRA recently surveyed a couple thousand Americans on retirement matters. What they found is that about 49 percent of the respondents aren't saving for retirement at all.

Yes, you read that right — HALF of the people are literally putting nothing away for their golden years!

Why not? Well, the majority suggested that they just couldn't afford to contribute to an IRA account.

Now I realize that the current economic climate IS certainly making it much harder on a lot of Americans … but the idea that half of us have it so bad we can't put anything into our retirement accounts just doesn't ring true based on my own interactions and observations.

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Instead, what I think a lot of our country's retirement have-nots are really saying is that, when it comes down to limited amounts of income, they'd much rather have new outfits, expensive cars, or the hottest gadgets instead of having money put away for the future.

This isn't all that surprising. After all, countless studies have demonstrated that many people struggle when it comes to delayed gratification. And they have also proven that those people who CAN plan for the future typically end up better off throughout life.

Take the infamous "Stanford marshmallow experiment."

Back in the late 1960s and early 1970s researchers took a group of kids (ages 4-6) and offered them each a single marshmallow to eat. However, they also gave them another option — wait 15 minutes without eating the marshmallow and they could have a second one.

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All told, 653 children participated. Some kids ate the marshmallows as soon as the researchers left the room. And even out of the group who tried to wait a little longer, only one third made it long enough to get the second marshmallow.

Even more interestingly, follow-up studies with the same group of children have showed high correlations between the ability to wait for the second marshmallow and overall success in life — based on everything from parental evaluations of general competence and well being to other measures into adulthood. Heck, the kids who were able to wait the full fifteen minutes scored an average of 215 points higher on their SATs than the children who couldn't wait 30 seconds!

Of course, even if some people have a higher innate propensity for retirement saving — which is perhaps THE biggest real-world example of delayed gratification — I still believe reasonable adults can at least change their ways a bit, assuming they're given reasons to do so.

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