Last updated: 02/29/2024

Some things are worth waiting for—especially when it comes to saving for your future retirement, your chance to spend time doing what you love without the daily 9-to-5 grind of work! Starting to save early and compounding interest are two best friends to your retirement savings, but that’s easier said than done. In this digital age, it’s easier than ever to spend money impulsively, with online shopping, one-click-to-buy apps, debit and credit cards, and just about anything you could ever want and need at your fingertips. But what can delaying gratification do for your retirement and savings in general?

What Is Delayed Gratification?

Delayed gratification is the ability to self-regulate your impulses, specifically those tied to pleasure, or “the ability to delay an impulse for an immediate reward to receive a more favorable reward at a later time” according to PositivePsychology.com. This concept has been extensively studied—see below for one of the most famous experiments.

The Marshmallow Experiments and Its Impact on Success

Stanford University researcher Walter Mischel conducted a famous experiment, colloquially called The Marshmallow Experiment. A marshmallow was placed in front of children aged between 4–5 who were told the researcher would leave the room. If the marshmallow was still there when he returned, they would be given a second marshmallow. If the child ate the marshmallow while he was gone, they would not be given a second marshmallow. The choice was simple: one treat now (instant gratification) or two treats later—if they could delay gratification.

As the researchers conducted follow ups over more than 40 years, interesting differences emerged between those who ate the one marshmallow and those who waited and received two. According to James Clear, “The children who were willing to delay gratification and waited to receive the second marshmallow ended up having higher SAT scores, lower levels of substance abuse, lower likelihood of obesity, better responses to stress, better social skills as reported by their parents, and generally better scores in a range of other life measures.” Overall, the message was clear: “the ability to delay gratification was critical for success in life.”

So, What Does This Mean for Retirement Planning?

Saving for retirement is a long game—perhaps one of the greatest examples of delaying your impulses now for future favorable rewards, as some of us are looking at 10, 20, or 30+ years before retirement. Putting money aside today for something so far into the future just isn’t, well, fun! Impulsive spending, like buying the latest iPhone, going on a Target run, or ordering takeout from Uber Eats five times a week, can put a serious dent in your finances and prevent you from attaining your long-term goals. Connecting with your future retired self can help you bridge the gap between short-term gratification and long-term savings and rewards. Our Retirement Income Planning Workbook can help you visualize your retirement and build your roadmap. Being patient and learning financial discipline is easier said than done.

Here are some tips for how you can apply the concept of delayed gratification to your finances and retirement planning:

1. Establish a reasonable and attainable savings goal you would like to hit – this could be at any interval you want (weekly, monthly, annually, etc.). You can always increase your savings goal as you grow in your career, get closer to retirement, and/or start to see your saving pay off.
2. List your long-term goals and keep them visible to remind you why you’re saving—and delaying gratification—in the first place.
3. Include small, regular rewards—and occasional bigger rewards – delayed gratification in general does not mean you have to delay all gratification. This would likely be a recipe for disaster and highly de-motivating for just about anyone. As Warren Buffet said, “You don’t save by not going to a movie. There is a lot to be said about saving money by denying yourself enjoyment. Delayed gratification is not necessarily an all-qualified reason.”
4. Wait 24 hours before making a purchase, especially something bigger. Ask yourself if it’s something you really need or if it’s just a want. Delaying your purchase, even by just a day, can help put it in perspective.
5. If you are going to make a purchase, save enough money to pay for it outright, even if you plan to put it on a credit card (for rewards or whatever reason you’re choosing to do so).
6. Change your mindset about saving – the act of saving can be gratifying when you see your accounts growing and have a nest egg to buy a home or pay for your children’s college education. Find a way to change the narrative around saving to be a form of gratification in itself.
7. Maximize your contributions to your 401(k) and other accounts you can contribute to before your paycheck hits your checking account – out of sight, out of mind, right? If you can shift money into your retirement and savings accounts and have the remainder deposited in your checking account, it’s easier to part ways with the money in the short term. My mom always told me that I wouldn’t miss that money if I never saw it in my checking account in the first place, and you know what? She’s been right about that ever since I started my first retirement account. Plus, you’re compounding your savings by not leaving 401(k) matching from your employer on the table.

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References

Baluch, Anna. (2019, March 29). The money-saving philosophy I’ve used since college has helped me buy the things I truly want. Business Insider. https://www.businessinsider.com/personal-finance/delayed-gratification-helped-me-save-money-2019-3

Clear, James. (n.d.) 40 Years of Stanford Research Found That People With This One Quality Are More Likely to Succeed. https://jamesclear.com/delayed-gratification

Davis, Kyrk. (n.d.) Delayed Gratification – Good or Bad? Fee For Plan. http://www.feeforplan.com/financial-planning-news/graduate-financial-planning/delayed-gratification-good-or-bad

Economic Times. (2019, May 4). Saving money is not necessarily the first thing to do in life: Buffet. https://economictimes.indiatimes.com/markets/stocks/news/saving-money-is-not-necessarily-the-first-thing-to-do-in-life-buffett/articleshow/69180245.cms?from=mdr

Steward, Amanda. (2021, October 7). What the “marshmallow study” means for retirement planning. LinkedIn. https://www.linkedin.com/pulse/what-marshmallow-study-means-retirement-planning-amanda-steward/?trackingId=juNT6BBJcv4WMzrZb5n6mA%3D%3D