Irwin Consulting Management in Singapore and Tokyo, Japan 3 obstacles that stand in the way of retirement

Irwin Consulting Management in Singapore and Tokyo, Japan on 3
obstacles that stand in the way of retirement savings
One in three American adults has nothing saved for retirement — here's how to change that.
Would you rather have one marshmallow now — or two marshmallows later? It's an iconic scenario made famous by psychologist
Walter Mischel, the administrator of the 1960s "marshmallow test" measuring self-control and instant gratification. Most people go for
the here and now. Swap out marshmallows with money, and you've got an all-too-common problem for the modern-day: People
everywhere feel behind on saving for retirement. In fact, one in three American adults has nothing at all socked away, according to a
survey by GOBankingRates. If that hits close to home, never fear. We've laid out some of the biggest obstacles we put in our own way
when it comes to retirement saving — plus, how to get past them.
Obstacle: Being too optimistic about the future
Why we do it: It's an ego thing. We tend to think we're different; we're special and that nothing bad will ever happen to us, say Dr.
Daniel Crosby, psychologist and president of Nocturne Capital. For example, we're more likely to entertain the idea we'll win the lottery
than to think about our chances of divorce, cancer and other negative possibilities. This type of confidence can benefit us in some areas
of life, but when it comes to finance — especially long-term savings — it can hurt us in the long run. Many people who are behind on
savings think they'll make up for it by working forever, but unexpected events and health concerns can put a wrench in those plans. In a
survey by Prudential Retirement of over 20,000 401(k) plan participants, 22 percent said "optimism bias" was their greatest challenge
when it comes to retirement savings.
The fix: Aim to compartmentalize your rosy outlook. This type of confidence can insulate your feelings of self-worth and make you
happier, but "know it has no place in investing," says Crosby. Block out some time on your calendar to do a "retirement reality check,"
says Snezana Zlatar, a senior vice president at Prudential Retirement. Use a retirement calculator like this one to see where you stand
realistically, and then adjust your savings plan based on the results. And if you don't have a savings plan? It's not too late to make one to
get your savings closer to where you'd like them to be. Take full advantage of your workplace retirement plan and any available
matching dollars, and automate savings to come directly out of each paycheck. If you don't have a workplace plan, mimic one by
automating contributions into an IRA.
Obstacle: Letting emotions reign over your financial decisions
Why we do it: Whether we like it or not, there's an emotional component to every decision we make. That's why research shows that
people with serious injuries to the emotional centers of their brain can't make certain decisions, such as which tie to wear or what to
have for breakfast in the morning. The kicker: Since fear doesn't affect their decisions, they tend to beat neurotypical people in
investment tasks. The lesson here: "None of us should be suckered into thinking we aren't emotional about money — because we
absolutely are," says Crosby. The key is to know how to use those emotions to your advantage.