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You need to save more for retirement. Here’s how visualizing your future can help.

I know I need to save more for retirement. But let’s face it: I’m a long way from retirement, and I need every penny of my paycheck today for rent, student loan payments and other expenses. Anyway, I can always boost my retirement account contributions a few years from now, when I’m more financially secure.

Does that sound like you? If so, you’re not alone. When it comes to saving and investing, a lot of us are victims of what behavioral economists call “present bias,” which describes the psychological tendency “to give stronger weight to payoffs that are closer to the present time when considering trade-offs between two future moments.”

But researchers have hit upon an intriguing approach to help younger investors conquer their present bias when it comes to saving for retirement-using virtual reality technology to help them visualize their lives as seniors.

Here’s how a research team at Stanford University tested their hypothesis that connecting people to an older version of themselves could help boost saving behaviors, as described by the Wall Street Journal:

[The researchers] took photos of college-age research subjects and digitally altered half of them to create virtual avatars at age 65-complete with jowls, bags under the eyes, and gray hair.

The research subjects were given goggles and sensors and were dropped into virtual reality, where they faced a mirror reflecting either their current self or their future self. As part of the experiment, they were each given $1,000 to spend. They could either buy a gift for someone special, invest in retirement, plan a fun event, or put money into a checking account.

Those research participants greeted by their aged avatar put more than twice as much money toward retirement as those who saw their contemporaneous selves.

To check this outcome, some research participants were shown the aged avatars of other test subjects to see if that impacted their choices. It didn’t. Only those who saw themselves at retirement age were likely to invest in their future.

The specific psychological concept in play here has been dubbed “the Proteus effect,” which describes a phenomenon in which participants in virtual worlds change their behavior to reflect the characteristics of their avatar in that virtual world. Researchers are discovering that those effects may carry over into the real world, as the Stanford retirement experiment suggests.

That’s according to Stanford’s Jeremy Bailensen, a communications professor and director of the university’s Virtual Human Interaction Lab. He was one of the researchers who introduced the “Proteus effect” concept in 2007, and was also involved in the retirement study.

“Virtual experiences are very intense and can have a deep and long-lasting behavioral change in the real world,” Bailensen told the Wall Street Journal.

For financial and investment advisors, these tools might be an effective way to help younger clients think more clearly about how their current spending and saving behaviors will affect their long-term prospects. Digital native millennials may respond more readily to a virtual reality rendering of their future selves than to a dry spreadsheet presentation.

Of course, you don’t necessarily need an expensive virtual reality system to help you think about the future and envision your life when you’re older. It can be as simple as spending some time playing with an online retirement calculator (like this tool from Vanguard) that allows you to test your savings assumptions to target how much you’ll need for a secure, comfortable retirement.

But however you go about envisioning your future, make sure you don’t stop there: the key point is to take action to boost your retirement and investment savings today, rather than putting it off until a tomorrow that never seems to come.

Take a look at a few of these past Project Invested articles about retirement saving for some practical tips on how you can get started now.


“If you don’t save money, you’re screwed.” Why millennials are saving more

Planning to retire? Then it’s time to start saving

A safe and secure retirement: The importance of advice and education

It’s never too early to save for retirement

Don’t spend that tax refund! Save and invest it for the future

Only 40% of Americans are making progress at saving. Here’s how to do better