When I was a little, I made my Halloween candy last until Thanksgiving. Witch or princess, I hustled for my loot, and lugged that plastic pumpkin home for safekeeping. I still remember the box I had that held 24 cardboard compartments, perhaps originally housing a set of tall champagne flutes. I used it to portion out my Halloween bounty so that it would last almost the whole month of November. I divvied up the chocolate bars so there would be at least one every day, and then filled in with all the minor players like Sweet Tarts and Good & Plenty.
Turns out this says something about me.
MarketWatch carried an interesting article last week with some new research from the National Bureau of Economic Research. Looks like our retirement savings crisis can be blamed on two culprits: financial illiteracy and impatience. J.P. Morgan’s Michael Falcon points out that while financial literacy is certainly lacking, the bigger problem is that “some behavior biases are so strong that they make us make bad decisions.” Specifically, choosing immediate gratification over larger, long-term payoffs.
Vanguard’s Stephen Utkus explains that there is evidence this tendency may be hard-wired in some of us:
“The argument is that the executive function of the brain, the prefontal cortex, sometimes has difficulty executing long-term plans—either perhaps because the prefontal cortex might be deficient in some way, or because more automatic and visceral processes in the brain overrule it.”
Which reminds me of that book by Daniel Goleman, Emotional Intelligence. It was a best seller back in the 90’s. I loved its premise that Emotional Intelligence (or EQ) is more important to success than IQ. I have no idea what my IQ is, but I’m pretty sure my EQ is higher, and the proof is in the Halloween box.
In the book, Goleman describes Stanford University’s marshmallow research. Four-year-olds were given a marshmallow and told that they could eat it right away if they wanted. However, if they waited until the researcher came back into the room, they could have that marshmallow and another one too. Some kids covered their eyes, some sat on their hands, others distracted themselves from the marshmallow’s lure by singing or talking to themselves, thereby earning the bonus marshmallow. Other kids devoured the marshmallow the moment the researchers left the room.
The study followed-up with these kids in high school and found that each four-year-old’s tendencies pretty much carried into their teenage years. Further, the kids that delayed gratification had better grades and better SAT scores. Generally the marshmallow test was twice as predictive of success as an IQ test.
Which leads me to believe that for those of you that didn’t actually ration your Halloween candy, you are going to have more success saving for retirement if you actually hate your job. Because the faster you save for your retirement, the earlier the instant gratification of walking out that door.
This is a post from Retirement: A Full-Time Job