Don't think you'll ever get old? Keith Richards probably didn't either. But at least he had a retirement plan.
Chances are good, however, that you're not saving enough for your retirement. To convince you to sock away enough gold for your golden years, Merrill Edge has launched an online magic mirror to remind you that you won't be forever young.
Face Retirement lives up to the catty double meaning in its name. Using a facial aging algorithm, the web app snaps a photo of you with your laptop's camera and then shows you what you'll look like at 47, 57, 67 and so on, all the way to 107.
The wrinkly, saggy results aren't pretty. And that's the point.
In a 2011 study cited by Merrill Edge (Merrill Lynch's online discount brokerage), Stanford behavioral economics researchers say that we're often reluctant to save for retirement because deep down we don't identify with that older person we'll one day be: "To people estranged from their future selves, saving is like a choice between spending money today or giving it to a stranger years from now."
To find out if they could alter that perception, the researchers immersed test subjects into a virtual reality simulation that showed them a computer-generated vision of themselves at retirement age and then asked them questions about money. The study found that "those who interacted with their virtual future selves exhibited an increased tendency to accept later monetary rewards over immediate ones." In other words, they were willing to save more.
Merrill Edge's app isn't as sophisticated as the Stanford version, but the results are still unnerving. The site's other scare tactic involves charting increased cost-of-living projections alongside your gravity-ravaged face. In 2042, a loaf of bread is expected to cost more than $6. In 2082, a gallon of gas could cost nearly $40.
If those figures are anywhere close to right, the majority of us could be in trouble. According to new figures from the Boston College Center for Retirement Studies, more than half of U.S. households aren't on track to maintain their current standard of living by retirement. Low savings rates could play a role in that, but the study puts much of the blame on falling interest rates and the bursting of the housing bubble, which itself was driven by excessive optimism that home prices would climb forever. When it comes to magical thinking, turns out retirement isn't the only thing we get wrong.
