Words Matter: How People in Different Demos Describe Retirement

401k, retirement, MIT, advisors
Common themes emerge on which advisors can capitalize.

High-profile MIT AgeLab director Joseph Coughlin is out with new research about retirement readiness and attitudes among various age and income demographics.

Specifically, Coughlin and co-researcher Chaiwoo Lee, a research scientist at the MIT AgeLab, identified certain keywords or phrases that aligned with outlooks and how individuals view retirement.

“Financial professionals can use the results to better address clients’ emotional needs, rather than solely focusing on rational financial planning,” they note.

They found perceptions of retirement to be generally positive, with a sense of optimism evident across different segments.

“Some demographic differences were found in thoughts on life after career. For example, people making less than $25,000 a year used fewer positive words and more negative words; younger adults’ images were more likely to address financial well-being; and older adults and those with higher incomes provided more images related to travel.

“People were generally optimistic about life after completion of career. Most of the words were positive, and images showing life after career were generally more positive compared to images representing today.”

A possible explanation, they add, can come from the positivity bias, or the Pollyanna Hypothesis, which “describes that people universally tend to use positive words more frequently and diversely than negative words.”

It is also aligned with past research that “found people to be more optimistic about the distant future compared to the imminent future.”

The results also showed how different segments view life after career.

“For example, older participants, suburban and rural residents, married people, and men provided more words addressing physical values compared to their counterparts. A perceptual mapping approach further revealed how some segments may be more or less likely to use certain words.”

Not surprisingly, “the positivity gap between the present and the future were greater among younger participants. However, while images from the younger participants showed wealth, family, and accomplishments with a positive lens, their descriptions lacked in how they plan to reach the ideal future state.”

John Sullivan
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.

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