If you've put off retirement savings because you're afraid of death, you are not alone
Financial planners should use strategies to help people cope with anxiety that might arise when discussing the future. (Shutterstock)
If you are not saving enough for your retirement, you may not be alone. A new study has shown that a large number of people avoid saving for their old age because they are afraid to think of their own death.
The result of the study showed that only a few people choose to invest in annuities - a guaranteed steady stream of income during retirement.
The lack of interest shown towards annuities was because it coerced people to think about how long they expect to live in order to calculate the potential payout for an annuity.
Thus, the findings, published online in the Journal of Consumer Psychology, proved that the fear of death tempts people to avoid making decisions about how to manage their savings during retirement.
"Our goal was to understand how we can help people overcome their avoidance of annuity products," said one of the study authors Linda Salisbury, professor at Boston College in Massachusetts, US.
However, the study also pointed out that apart from annuities, the retirees may also be avoiding estate planning, wills and life insurance due to fear of death.
For the study, the team presented two groups with a hypothetical scenario in which they were 65 years old and beginning retirement. One group was asked if they were interested in putting their savings into an individual retirement account (IRA), while the second group was asked if they were interested in an annuity.
After giving their responses, the participants in both groups talked about the thoughts they were having. The researchers found that 40 per cent in the annuity group had death-related thoughts, compared to only one per cent in the IRA group.
The investigators further tested their theory by asking participants in the first group to write an essay about their own death, such as how it would happen and the emotions involved.
The second group wrote an essay about a time they experienced dental pain. Then the groups were presented with the scenario of being 65 and retiring.
When asked if they wanted to put savings into an annuity, the group that had written about their own death was 50 per cent less likely to choose an annuity.
The researchers suggested financial planners should make use of simple strategies to help people cope with the anxiety that the thought of death might evoke in these situations.