The Retirement Fear Factor

If you’re like a majority of American adults, you aren’t putting away enough money to keep your current standard of living when you retire.  When you’re young, retirement seems light years away. But most financial advisers have far less patience for middle-aged workers who lack a strong savings plan.

But for many workers, fear — rather than complacency — may be the reason certain individuals are not putting enough money away, according to a recently published study.  In fact, anxiety about retirement can actually disrupt an individual’s capacity to digest information about retirement planning, Oklahoma State University psychological researchers found.  

Helen Gutierrez and Douglas Hershey based their investigation on previous research showing that people process psychologically intimidating words more slowly than innocuous words.  Individuals with anxiety disorders, for example, take longer to respond to threat words such as worry or nervous, compared to neutral words like dog or desk, because those former words are directly related to their condition.

Gutierrez and Hershey wanted to find out how this information-processing delay might occur with people worried about their retirement finances. For their study, they recruited middle-aged working adults to take a computerized test designed to record response time to stimuli.  Each volunteer saw words appear on the screen one at a time, and were instructed to indicate the color of the font.  They saw in random order neutral words such as canyon, train, and wrench, as well as retirement-linked words like saving, planning, and poverty. 

After completing the task, the participants filled out a questionnaire that assessed the level of financial fears they harbor in relation to retirement. They were asked, for example, to rate how much they worry about making mistakes on investment decisions, or how concerned they were about lacking enough money in retirement.

As Gutierrez and Hershey predicted, participants who indicated significant retirement-related worries on the questionnaire had taken longer to process the color of retirement- and finance-related words on the computer task compared with neutral words.  This indicates that people who fret the possible financial perils of retirement have difficulty conceptualizing financial information, they report in the Journal of Neuroscience, Psychology, and Economics.  

The findings rouse some important considerations for financial planners and retirement counselors, the researchers say, signaling that simply encouraging anxious individuals to plan and save may be ineffective.   

“Certainly, one important take-away message is that a poor pattern of saving for a nonplanner does not simply reflect a poor attitude toward retirement preparation or a lack of motivation,” Gutierrez and Hershey wrote. “The difficulties some individuals experience in becoming engaged in the planning process might perhaps stem from a more fundamental challenge having to do with the way in which retirement concepts are semantically stored and cognitively processed.”