Why We Experience Regret Over Savings--and What We Can Do About It
It’s not about preventing regret but learning to reframe it.
It’s not about preventing regret but learning to reframe it.
Millions of Americans exiting the workforce--and many more actively participating in it--appear to exhibit a single financial regret that’s rooted in their youthful decisions: They cite not saving enough for their retirement as one of their biggest financial regrets.
Regret is probably familiar to us all and, just like with our other emotions, it's quite complex. In fact, beyond feeling regret about the decisions we've already made, we can also feel it about the ones that we have yet to make. This is an important point because regret over retirement savings can manifest not just after you retire, but while you are in the process of preparing for it.
Let’s take a closer look at the psychology of this fascinating emotion and see what lessons we can draw to help overcome regret that can stem from retirement preparation.
Coping with regret is indeed a challenging feat. After all, it’s impossible to undo decisions made in the past. How can we cope with the unpleasant feeling that this emotion elicits? First and foremost, it’s counterproductive to simply try to stop thinking about the cause of your regret. Say someone tells you not to think about a white bear. What's the first thing you think of? A white bear!
To move toward the future with your best foot forward, you can consider these steps:
Regret isn’t limited to things that we’ve done in the past. In fact, sometimes our desire to avoid future regret altogether can discourage us from investing. Even if retirement is still decades away, there are some steps we can take now to prevent us from having any regrets down the line.
Here are three simple strategies derived from the literature that people have used to prevent future regret:
With each decision we make we face the possibility of regret down the line. This emotion, of course, isn’t pleasant to experience and has potential to cloud our financial decisions. Ruminating on our decisions, however, will not help us make better decisions in the future--after all, we can experience regret even after making good choices.
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