How to Harness Anticipated Regret
Financial regret is common. In one nationally representative study in which people were asked to name a significant life regret, finances made the top five most mentioned. Ranking ahead of parenting.
Sometimes regret happens because the consequences of major decisions are often only obvious well after the fact. For example, you choose a career that pays well, but you may go several years down this track before it becomes apparent that you're not suited for this kind of work.
But other times we choose a course of action that goes against common sense because our emotional desire overpowers our rational thinking. Eighteenth-century English writer Samuel Johnson once described a second marriage as "the triumph of hope over experience."1
In financial matters (as in everything else) we can't know what the future will hold. But we can have a pretty good idea of how we'll feel on some future day when we've set ourselves up for money woes. Thinking about this future regret and working to avoid it can help us make better financial decisions.
Suzanne Schmitt writes in Advisorpedia that if a person saving for retirement can take time to imagine the implications of a negative outcome tomorrow, it can be a strong motive for better financial decision-making today.2 She calls this exercise anticipatory regret. Schmitt writes, "It involves imagining missed opportunities or potential mistakes, which in turn activates parts of the brain linked with both decision-making and emotions."
In other words, it's a good idea to experience some of the bad feelings you could have in the future if you're not disciplined today, because you still have time to make better decisions. Of course, the added benefit is that when you know you continue to be disciplined about the things you can control, you experience greater peace of mind.
Good retirement planning is more than just avoiding regret. So be sure to talk with us about the hopes and dreams you have for your retirement years, and he or she will make sure your personal plan is on track for your unique timeline.
1. http://go.pardot.com/e/91522/marriage-html-89/96nczc/2793951433/h/TXM_S41O3WwnXhv0GR7uHjfHejYDuZaTbgyMFC25OQU
2. http://go.pardot.com/e/91522/-regret-in-financial-planning-/96nczg/2793951433/h/TXM_S41O3WwnXhv0GR7uHjfHejYDuZaTbgyMFC25OQU
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