Study: Fear of Death Spurs People to Avoid Making Retirement Decisions
A fear of thinking about death is a key reason that more than half of American households won’t have enough retirement income to maintain their standards of living if they retire at age 65.
New research from Boston College and published in the Journal of Consumer Psychology says fear of death spurs people to avoid making decisionsLink Icon about how to manage their savings during retirement. The researchers investigated the reason so few people invest in annuities, which is generally a reliable stream of income during retirement years.
“People need to think about how long they expect to live in order to calculate the potential payout for an annuity,” said Linda Salisbury, a Boston College marketing professor and co-author of the study. “Our goal was to understand how we can help people overcome their avoidance of annuity products.”
The researchers presented two groups with the scenario that group members were 65 years old and beginning retirement. One group was asked if they were interested in putting their savings into an Individual Retirement Account and the other group was asked if they were interested in an annuity. Participants discussed their thought processes during the scenario. Researchers discovered that 40 percent in the annuity group had death-related thoughts, compared to 1 percent in the IRA group.
They also found that more people opted for annuities when presented with a brochure highlighting that monthly payouts would be a certain amount “each year they lived” versus a lower response from the group presented with a brochure that stated the payouts would be a certain amount “each year until they died.”
“Our findings suggest there may be simple ways financial planners can reduce thoughts about death in these situations,” Salisbury said. “There may be strategies to help people cope with the anxiety that these thoughts might evoke.” She added that the findings also could have implications for decisions about estate planning, wills and life insurance.
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