In an article titled “Empathizing with Your Future Self May Help Long-Term Financial Decision-making,” written by Hal Hershfield, PhD, discusses the concept of “Future Self” and how empathizing with your future self may help you meet long-term financial goals. Studies have shown that when people think about what life might look like in 20 years or so, they tend to think of themselves in the third person and not really as themselves, which can lead to decisions that are disconnected from what is truly important to them.
Try it: Take a few seconds and imagine yourself 20 years from now. Think about what life might look like. Do you actually see yourself—or somebody else?
When we are young and starting out, life moves at high speed. We might be hungry for success in our careers, starting families, perhaps buying a house or relocating, etc. During that period, it’s rare that we take the time to envision what we want our lives to look like. Then, in the midlife phase, we tend to look back on what we’ve accomplished up to this point and how those accomplishments match up with the expectations we had for ourselves when we were younger. For some, unfortunately, the mismatch can lead to what is commonly called a midlife crisis: a sort of emotional—and sometimes, financial—meltdown that accompanies the effort to make up for the perception of lost time and lost opportunities.
Midlife is a time when many are dealing with the aging or passing of parents, an experience that often brings a certain priority to figuring out where we really want to take the rest of our lives and what really matters most. We may be asking ourselves some hard questions:
- Ten years from now, what will I regret not having done or at least attempted?
- Who are the most important people in my life, and how can I spend more time deepening those relationships?
- How would I like for people to remember me?
- What are the causes or efforts I really care about?
Asking these questions is a good thing, especially if we can think of our Future Selves in the first person and have some empathy. This may lead us toward the kind of intentional planning that helps us find the answers. Rather than regretting who we have become and how we have lived our lives, we can pose the questions and then seek the answers in a systematic, practical way.
A big part of our role as financial advisors and planners is helping our clients deal with the financial infrastructure that comes along with these questions. The fact is, just about everything we do or aspire to do in life has some kind of financial price tag, and that’s where good financial planning needs to start. When you know where you want to go and why, there is a better chance you will get there.
Of course, the financial implications for “what’s next” are different for each individual and phase of life. Some, getting closer to a traditional retirement age, are building a vision for what life looks like beyond work – perhaps traveling, pursuing hobbies, making time for friends, and socializing. The financial goal might be to save as much as possible now to allow for freedom to relax and play. This likely means maximizing contributions to retirement accounts over the next several years, anticipating future tax liabilities, and paying down as much debt as possible in anticipation of having enough income and assets once they stop working.
But for others whose vision is different—perhaps maintaining the family house filled with multiple generations during the holidays, supporting the lifestyles of their children, helping future generations with the rising cost of education, or supporting their aging parents—it might make more sense to plan on working a few extra years and allocating more of current earnings to those support needs as they continue to build a legacy.
Every individual’s view of their Future Self is a little different, and I could go on and on with the scenarios. But the important takeaway is to have an understanding of what is right for you and make financial decisions that are consistent with who you want to become.
Whatever your “what’s next” looks like, it’s vital to have professional guidance that puts your priorities, lifestyle needs, and goals ahead of everything else. What questions are you asking yourself these days? What financial resources do you need to fund your search for the answers? At Curio, we are motivated to know more—and to help you know more, too. To learn more, visit our website and read our article, “Early Retirement: Dream or Reality?”
