Positivity is a Powerhouse: How to Help Employees Generate Positive Attitudes to Impact Retirement Readiness

So from a resilience standpoint, positivity may be a game changer for retirement savings. And yet, negativity is, at its core, a survival skill. It’s so strongly ingrained into our outlook that we are trained to search for potential threats under every little nook and cranny

Much of mainstream media seems to be full of mental health information, including the importance of mindfulness, and lately positivity. Positivity, that is, feelings of joy, fulfillment, amusement and happiness, are good for not just your outlook on life, but also your health, relationships and resilience, a topic we covered earlier this year. Positivity can increase your immune system, reduce your risk of heart attack and possibly even lower your rate of depression. But, can such happy vibes be good for investing and retirement readiness?

Positivity is linked to better communication skills not only in close relationships, like families and friends, but also in teams and coworkers. It’s also, importantly, linked to problem solving and creativity. So from a resilience standpoint, positivity may be a game changer for retirement savings. And yet. Negativity is, at its core, a survival skill. It’s strongly ingrained into our outlook based on eons of evolution. Survival requires our attention any possible negative outcome. We are trained to search for them, under every little nook and cranny. Optimism is neither a successful survival skill nor an appropriate investment approach.

Behavioral finance experts are crystal clear on the drawbacks of optimism in investing. A bias towards optimism leads to unrealistic expectations of their investment’s and potential returns. Optimism bias has been shown to lead investors to overestimate their investment’s results.  Optimism also leads to overconfidence in an investor’s ability to predict outcomes. Optimism is necessary for a healthy relationship with investing and life, however. It takes optimism to take the risk of investing to begin with, as well as plan for a future. But too much optimism, or an ignorance of optimism bias can lead to bad results. In other words, optimism in investing is best balanced by a little skepticism.

That leads to a conflict: how can positivity be helpful in leading employees become more retirement ready? The answer is timing: positivity that allows for in-the-moment emotions can help boost results, not a rosy glow about one’s overall life.  The goal is solution centered thinking, not to mask or ignore truths.

Some behavioral finance experts note that positivity helps you hold your investments during a market’s bumpy ride, where as pessimism might force you to drop those investments. Positivity, apparently, is the balance setter between the optimism needed to get going and keep going and the skepticism to know when to stop going.

Given that perspective, how can a plan sponsor help boost positivity in employees to help them be more successful in saving for retirement? Behaviorists suggest stressing that positivity is learned (unlike negativity which is innate). They say that positivity can be taught, just like any other skill. Applying the four stages of learning to positivity training could be helpful in leading employees to use more positivity in their retirement saving. Those stages are: 1) understanding that you don’t know what you don’t know, 2) learning what you don’t know, 3) knowing what you know and 4) knowing what you know so well that its ingrained. Many employees might not even know that positivity is a skill rather than a mindset. Teaching employees that a lack of positivity isn’t a character flaw, but rather an unlearned tool may do most of the work for you. That is, employees may not even know what they don’t know. Positivity can be practiced and learned, and become innate.

Other suggestions include helping employees prioritize positive experiences in their daily lives, by first recognizing those experiences and second by making them routine.  Some employers may find making aps and programs like Happify available to employees can help boost positivity skills.

One suggestion might be to focus on creative engagement. Experts suggest that helping employees look for what is interesting and useful in a new situation expands attention and helps employees find solutions, rather than threats.

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