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The Takeaway: Saving for Retirement? Why <em>Not</em> to Think Big Picture


When it comes to saving enough for retirement, it's important to keep the big picture in mind, right? Wrong, say researchers from Boston College's Center for Retirement Research; the  best strategy is to think in small, concrete steps.

This doesn't matter as much if the goal is near term," said Nicole Votolato Montgomery, co-author of the study and an assistant professor of marketing at the College of William & Mary's Mason School of Business.

But if you're thinking about something years (or decades) away, how you frame the goal really matters.

So what does "small step" framing look like? Instead of just projecting the total amount you'll need in retirement, focus on the steps you have to take to build the savings. How much do you have to save every week, month or year? Rather than focusing on some hardly fathomable end result ("I need $1 million to retire") concentrate on achieving smaller retirement savings goals ($200 this week, $1,000 this month, etc.).

When you do think big picture, it helps to frame saving as a means to ensure against negative things and sacrifices when you're older. A separate study by Montgomery and colleagues found this mindset helped savers put away more than framing saving for retirement as a way to enjoy or enrich their lives later.

Friday Quick Hits:

  • And 92-year-old Hyman Strachman, known as "Big Hy," is one of the most prolific bootleggers of Hollywood DVDs, shipping thousands of movie copies overseas from his Long Island apartment-to U.S. soldiers. The WWII veteran, who acknowledges he is violating copyright law, began doing it as a way to stay busy after his wife died.

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