Saving Marshmallows for Retirement

Back in the 1960s, researchers at Stanford University conducted a study on kids’ emotional maturity. Specifically, they were examining how much “delayed gratification” preschoolers could display. The researchers gave one marshmallow to a child and said the youngster could eat the marshmallow right away. However, if the child could wait 15 or 20 minutes until the researcher returned, the kid would get two marshmallows.

The researchers then followed these kids into adulthood and evaluated several measures of success in life. At least while in school, the kids who could wait (who were willing to delay gratification) earned better grades, higher SAT scores and had more friends. Apparently patience was a virtue.

Fast forward to today. In a recent retirement savings study, researchers noted that workers do not easily buy the idea of payoffs in the far future. For an adult, you can spend $1 from your paycheck now, or have $2 in 10 to 20 years in a retirement account. That 10- to 20-year time period probably seems about as long as 10 to 20 minutes for a 4-year old. For some of today’s workers, the promise of pleasure tomorrow (in retirement) means pain today. Rather than put money into a retirement account, spend it now on a car payment, braces, college, what have you.

Yet some workers do choose to save for retirement today. Maybe the same ones who could wait for that 2nd marshmallow. So what’s the difference? Why do some of us save and some of us consume our entire paycheck?

Researchers and scientists can’t answer those questions with certainty, though there are theories. One says that modeling has a big influence on learned behavior. If your parents were savers and “taught” you to save (in word and deed) as a child, you’re more likely to understand how to delay gratification.

Especially in today’s “instant” society, longer-term thinking is somewhat of a foreign concept. Who can plan ahead for 20 years when the benefits of texting, microwave ovens and overnight mail are all too commonly enjoyed? The emphasis is on the here and now; no wonder our national personal saving rate is under 5%.

But now that you know about marshmallows and retirement savings, maybe you’ll be more likely to start saving (or save even more!) for retirement. The next time you have a choice to save for retirement (that would be your next paycheck), don’t touch the marshmallow. Wait a while instead and see if you don’t enjoy more marshmallows later on in retirement. Just another simple way to maximize your retirement readiness.


About Mike Wilson

Michael L. Wilson, MBA, CFP®, CRC®, is the owner of Integrity Financial Planning. Prior to founding Integrity in 1998, he worked for two years as a faculty member at the College for Financial Planning in Denver, training other financial advisors. Mike has 10 years of experience in the mutual fund industry, having worked with Fidelity Investments and Invesco Mutual Funds. He holds an MBA in Finance from Baylor University. Learn more about his work at
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