FOMO, or the fear of missing out, is one factor that can severely affect retirement planning. Award-winning author and retirement expert, Anne Lester, joined Robert 'Bob' Powell on the debut episode of Decoding Retirement to discuss FOMO, present bias, and advice from Lester's book, 'Your Best Financial Life: Save Smart Now for the Future You Want'.
Present bias (decoded):
Present bias is the tendency to favor immediate rewards over larger future benefits, leading to short-term decision making.
"So I'm watching Netflix and it's 10 o'clock and the next episode starts and I hit skip intro and think, wait a minute, what time do you have to wake up?" Lester explained, "And then it's 10:30, and then I hit skip intro again, and then the next thing you know, it's one o'clock in the morning and you think, I've only got one episode left, I'm gonna keep watching. Right? We've all done that. That is present bias in action right there."
How to stay on your retirement track
"One of the most powerful things that is now helping Gen Zs and anybody who changes jobs is getting automatically enrolled," Lester added. "So is your employer automatically increasing your savings rates? That's another hack. Most people stay with the plan. They don't drop out because they know they should. If your employer doesn't do that for you automatically, you can do it to yourself by, again, either asking them to increase your contribution rate or just saying ... I'm going to bump up my rate. Those are hacks that will help you stay on track."
Retirement planning doesn’t mean locking up your money for a rainy day and forgetting about it. Planning your future means reacting to events today. Decoding Retirement gives you the tools to navigate the years ahead, and take action now!
Yahoo Finance's Decoding Retirement is hosted by Robert Powell, and produced by Zach Faulds and Alexander Frangeskides.
Find more episodes of Decoding Retirement at https://www.perfectloveletters.com/videos/series/decoding-retirement.
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Editor's note: This post was written by Zach Faulds.