Running Out Of Money Linked To Death By Study

Posted: Mar 28 2016, 9:37am CDT | by , in News | Latest Science News

Running Out of Money Linked to Death by Study
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  • Financial Woes tied to Phobia regarding Death

It has been found that one’s financial woes are tied to a phobia regarding death.

More than half of all American households will not have enough of a nest egg to carry on enjoying the luxuries they currently take for granted. That is when the breadwinner retires at 65 years of age.

What is the real reason behind this gerontocratic unfairness. Well, most individuals are pretty scared about their own demise. The study was published online in the Journal of Consumer Psychology.

This extreme death phobia prevents rational individuals from making wise decisions regarding their retirement plans.

The experts decided to see for themselves why such a small number of people invest in annuities. These would normally assure them of continuous cash flow throughout the retirement years.

However, the public does not choose to settle for annuities. This has been called the annuity puzzle. It has baffled researchers for many generations.

The experts inquired into the matter further. What they found out was that people probably avoided investing in annuities due to the thoughts of their own deaths that interfered in the process.

These morbid feelings immediately started haunting them. The though process involved in calculating the payout for an annuity has to take into account how long a person will live. This is a rough estimate yet it sets many hearts beating faster out of sheer anxiety about their own demise.

So the goal for now is to make people comfortable enough with reality so that they could invest in annuities on a regular basis.

"People need to think about how long they expect to live in order to calculate the potential payout for an annuity," said Linda Salisbury, a Boston College marketing professor and co-author of the study.

"Our goal was to understand how we can help people overcome their avoidance of annuity products."

Two posses of people were presented with a make-belief situation each. They were told to suppose for a second that they were 65 years old and about to retire from the rat race.

One group was offered an IRA account while the other one was given the choice of an annuity. At least 40% in the annuity group immediately began thinking morbid thoughts related to their future demise. Only 1% of the IRA group had such negative and depressing thoughts.

Another experiment was given a go. Two groups were assembled. One group was asked to write a detailed essay about their death which would supposedly take place in the future.

Another one was asked to pen down a write up about going to the dentist for a painful tooth extraction. Finally, both groups were presented with the scenario of retirement and being 65 years old.

When they were asked to invest in an annuity, the bunch that had written about their hypothetical death declined the offer by a whopping 50%. Even changing the words on annuity brochures from “death” to “life” caused a surprising transformation.

The majority chose annuities when “life” was mentioned than those reminded of their “death”. Nobody likes to go into an overthinking mode when it comes to their own death. It is a depressing topic that is best kept lurking in the subterranean and murky depths of the unconscious where it rightfully belongs.

"Our findings suggest there may be simple ways financial planners can reduce thoughts about death in these situations," Salisbury said. "There may also be strategies to help people cope with the anxiety that these thoughts might evoke."

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<a href="/latest_stories/all/all/20" rel="author">Sumayah Aamir</a>
Sumayah Aamir (Google+) has deep experience in analyzing the latest trends.




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