Retirement tips: Here's how to save more now

iStockphoto JJRD

When you're planning for retirement, your future self doesn't stand a chance battling your current self. That's the powerful message of an excellent video hosted by the Financial Security Project at Boston College. Let me show you what I mean.

Spend for today or save for tomorrow? Your present self is happy when you spend and unhappy when you save.

Take Social Security as early as possible to get the money now or delay it to let it grow? Your current self gives you a high five for taking it now!

In retirement, draw down your 401(k) retirement savings at a much faster rate than 4 percent to pay for the things you want? No worries, says your current self. Somehow it will all work out.

Can your future self ever win? It's not even here today to defend itself! The short answer is nope -- not unless you take special steps now to help your future self.

Daniel Goldstein, the noted psychologist in the above-mentioned video, suggests that you use "commitment devices," or schemes, that your rational, planning future self puts in place. These schemes force you to take care of your future self. Good examples of retirement planning commitment devices include:

-- Saving more with automatic payroll savings and auto escalation with 401(k) plans.
-- Throwing away credit cards that enable you to spend too much.
-- In retirement, using managed payout funds and immediate annuities that send you a monthly paycheck from your retirement savings, so that paycheck lasts for life.

Goldstein goes on to encourage you to imagine your future self being happy and financially secure and asks if you can find the discipline to take steps today to make that future self happy and secure. In a fascinating paper, Goldstein describes experiments where subjects "interacted" with their future self by seeing pictures of themselves that had been "aged." During these experiments, the future self smiled if their present self saved more for retirement and frowned if they saved less. Subjects report that they were more likely to plan for their future if they could see and interact with their future selves.

If you're not faint-hearted, try one of the online software programs that will age a photo of your face. I tried the iPad app AgingBooth, which added 30-plus years to my face. The first few photos of me that were aged were kind of scary, but were also deeply moving. I tried several photos until I found an older "me" that I liked. The exercise made me want to be sure that the older me is OK and doing well -- not only financially but with my physical health as well.

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Unbeknownst to my wife, I ran the program on a photo of her, too. It made me compassionate for both of us. I know that our shared experience will only deepen as we age and that we'll take care of each other as we get older. I have no real worries because I know we'll be committed to make it all work out.

Photo courtesy of iStockphoto contributor JJRD

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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