The link between inputs and outputs is not always clear. That which dwells in the space between cause and effect can be downright elusive.
While this premise can often be aptly applied to the concept of retirement planning, the recent case of Tommy Main’s death, after engaging in the latest online gaming abhorrence “Punch4Punch”, is as cut and dried as it gets.
Sadly not so for the local constabulary.
The game involves two people taking turns to hit each other, one arm tied behind the back, while drinking excessively until one gives up. The footage is then posted online.
Detectives described the death as “unexplained”. Really? So nothing to do with the relentless drinking/punching symbiosis?
The case of the long-term savings gap is far more of a quandary and far less conducive to drinking games.
Recent research by BlackRock revealed that those aged between 25 and 34 have the highest expectations for retirement, claiming to need an annual household income of £54,000 in later life.
However, they believe they only need a £375,500 pension pot to achieve this.
The stark reality is that they would likely need a pot around two-and-a-half times more, which is worrying given that half of the British 25- to 34-year-olds surveyed said they are not yet saving for retirement.
Thinking about the future is different from thinking about the present.
It is perhaps time to stop railing against the weakness of will and lack of self-control and accept that long-term planning is an unnatural act that requires outsmarting the brain’s natural focus on the present and near-future.
Events or ideas far off in time are thought of in abstract and general terms, with an unavoidable overlay of optimism.
How do we get over this? How do we “de-bias” people to think about their future selves more concretely and vividly?
Perhaps the only way to bridge the disconnect is to join the disaffected at their own game: one whereby two 30-somethings (drink in one hand, sponge baton in the other) take it in turns to guess the likely income secured from pensions pots of varying sizes with incorrect guesses inducing mandatory downed shots of something horrid and biffs on the bonce from their co-participant.
This would, of course, be streamed online, presenting wonderful sponsorship opportunities for annuity providers.
It’s either that or good advice.
Phil Wickenden is managing director of So Here’s the Plan