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How fear of death can present a hurdle to retirement planning

A new study has found that many people fail to make necessary decisions about the future because they are too scared to think about death. According to researchers from Boston College in Massachusetts, fear of death causes individuals to avoid preparing financially for old age. The anxiety can affect choices about managing savings for retirement, purchasing life insurance, estate planning and drafting wills.

Study co-authors Linda Salisbury and Gergana Nenkov, both marketing professors, wanted to investigate why many individuals do not invest in annuities. Annuities provide a steady stream of income during retirement while individual retirement accounts (IRA) do not.

In one of four related experiments, the researchers asked participants to imagine they were 65 years old and starting retirement. One group was asked if they wanted to put their savings into an IRA, while the second group was asked about an annuity. The participants’ thoughts were analyzed afterwards. The researchers found that only one percent of those examining IRA options had death-related thoughts in comparison to 40 percent of the annuity group participants.

The findings were published online in the Journal of Consumer Psychology. They suggested that in contrast to IRAs, annuities force people to think about their life expectancy in order to calculate their potential payments. As a result, individuals may put off planning for the important life phase of retirement because they are reluctant to decide how long they expect to live.

The researchers suggested financial planners should use simple strategies to help individuals cope with any anxiety that may arise from thinking about death. In addition, viewing estate planning as a tool for helping heirs and family members rather than as a way to prepare for one’s death is likely to make planning for the future seem like less of a daunting prospect.

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