PROJECTION BIAS
‘Failing to observe that future preferences could differ from today’
We often fail to recognise that our life will be different in the future.
Ever shopped for food when you’re very hungry? Chances are you’ll buy much more than you need. We struggle to empathise with our future self and recognise that once we’ve eaten we won’t feel hungry.
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It’s important that your clients realise their circumstances will change during retirement. Share these facts:
- Deteriorating health. On average, a 65 year old can look forward to around 9 years good health. Women fare slightly better.
- Declining mental capacity. Cognitive ability starts to decline around age 75.
- Disability. Two thirds of people over 85 have a disability or longstanding illness.
Clients should be made aware that they may need to review regularly the decisions they make now in the light of changing circumstances.