If imagining yourself elderly and destitute isn’t enough of an impetus to save more for retirement, here’s another reason: Everyone else is doing it.
At least that’s the idea behind online tools that allow people to compare their savings habits to others in a similar demographic.
This year, the New York Times reports, investment management firm Putnam Investments started allowing customers to see how their savings stack up against other account holders who are comparable in age, income and gender. The tool also shows users how their ranking could improve if they put away more, and lets them to do so easily on the website.
Meanwhile, the ING Compare Me site provides similar services and has been available to the general public for five years now. Users can take a survey that compares different aspects of their financial profile—like savings and credit card debt—to other similar people.
Based on preliminary research, the social comparison system seems to be working. Putnam tested the tool on 10,000 users and nearly a third opted to see how their ranking would change if they adjusted their savings rate. On average, the users in that group increased their annual contributions to their retirement account by 28%, from 7.5% to 9.6% of their salary
ING also tested its site a few years ago on 28,000 employees of the company’s bigger clients. 64% of users said they improved their financial habits in some way after taking the survey, whether that meant signing up for a retirement plan or bumping up their savings rate.
But another study suggests that, in some cases, receiving information about how much other people your age are putting into their retirement accounts can prompt you to decrease the amount you save. The study authors suspect that many people get discouraged when they’re compared to those saving more.
If peer pressure isn’t motivating you to start beefing up your retirement account, try one of these mental hacks, like visualizing your dream future.