Retirement savings affected by human factors

Last week I attended the Workplace Savings NZ conference ‘Shifting the Story Line’.

The keynote speaker was UK behavioural economist Dr Nick Southgate, who spoke about how people’s behaviour and attitudes to saving affect their decision making about retirement savings. Investing for your retirement is something we know we need to do, but it can be a difficult thing to commit to because of the way our brains work.

Image: Jar with coins.

Investing is something we know we need to do, but it can be hard to commit to. (Image by Pictures of Money (CC BY 2.0))

Dr Southgate says that human beings are designed to be more interested in what is happening now than in the future. In his presentation, he discussed some of the human factors that affect people’s behaviour towards saving. He suggested some techniques that may help providers of investment funds to find ways to encourage people’s saving habits.

Read the report in the NZ Herald
See the slides from Dr Southgate’s presentation

Aim for clear, concise, and effective documents

Many speakers at the conference referred to another important factor in encouraging people to invest in KiwiSaver and other retirement savings schemes: providing investors with clear, easy-to-read information so they can make decisions with greater confidence.We’re more likely to read, understand, and act on information that is written in plain language.

So in a presentation later on at the conference with financial consultant Helen MacKenzie, I emphasised ways of keeping readers interested in the content of investment statements and other financial information.

In particular, keep your readers happy by presenting what is often complex information using straightforward language and short sentences. Add useful visuals, case studies, and examples to help explain your concepts. Avoid legalistic language and include definitions of technical terms.

Think of the human factors: just as we find it hard to think about savings in the future, we struggle with information that’s hard to process.

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