If you don't take care of yourself or save for retirement, should the rest of us bail you out?
A recent study raised that question by looking at people's apparent built-in inclination or disinclination to plan for the future.
The study, which followed workers from a single company for two years, found that people who were saving for retirement were much more likely to be proactive about their health, while those who weren't saving were often the same people who ignored troubling health issues that were likely to get worse because they were being ignored.
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Co-author Lamar Pierce, associate professor at the Olin Business School at Washington University in St. Louis, says researchers examined the 401(k) contributions of about 200 employees of a laundry equipment company and then took stock of each worker's health, including a blood test, cholesterol screen, kidney and iron levels, how often they exercised and whether they smoked. Some 98 percent of them had at least one abnormal blood test, and 25 percent had at least one severely abnormal finding.
All workers were told about their health screen results and were given suggestions for improvement. The results were also sent to their personal physicians. Over the course of the next two years, each worker was retested, some more than once. Pierce says employees who contributed to their 401(k)s were 27 percent more likely to also show improvement in their abnormal blood-test results and other health behaviors than those who didn't contribute.
"If you give everybody the same information about their health or their well being in retirement, some people will do something about it and some people won't," Pierce says.
He calls it a "time-discounting" issue. "People have very different perceptions of time," he says. And that translates into different ways of looking at the need to take care of your health now before you get sick later or the necessity of saving now for a later retirement rather than spending everything you earn. "Some people care a lot more about buying things now than they do about buying things in the future," he says.
Education doesn't solve the problem
Pierce points out that in this study, most of the workers earned about $39,000 annually -- significantly above minimum wage -- so while the study didn't investigate if people were too strapped to save, there was no evidence that poverty was a factor in their health care or retirement planning decisions. Other research about this topic, Pierce says in the study, suggests that a person's inclination to behave one way or the other is very difficult to change and providing them with information -- as this study did -- probably won't make much difference in their behavior.
"A reasonable hypothesis is that you could solve this problem with information, but there are people who, no matter how much information you give them, aren't going to choose to do anything differently," he says.
One conclusion that you might draw from this study, he believes, is that we all have a vested interest in ensuring that most people do what is good for them from a health and retirement savings standpoint because if they don't -- and we don't want them to go without -- we'll all have to pay the price down the road when they need and can't pay for basic living expenses or sophisticated health care.
"If we don’t like the idea of people starving to death in their old age or dying because they can't afford expensive health care -- if these are our human values -- then we have to realize that a sizable portion of the population will end up that way unless there is something like Social Security that requires them to make a contribution," Pierce says.
"A lot of people aren't going to make the choices on their own that are going to result in good outcomes later in life, and what that means is the public has a strong interest in ensuring that we have some sort of control over how and what we are going to pay to care for them."
Here are some tips for staying motivated to save.