Episode 349 – Being an optimist has been shown to increase your overall well-being. But in a recent article in Think Advisor, author Michael Finke suggests that optimism can also help with your retirement planning efforts.

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, optimism can help you with your retirement.

Being an optimist has been shown to increase your overall health. According to the Mayo Clinic, “people with a positive outlook on life may not only have healthier hearts, but also they may be healthier and happier in general.”[1]

The science of optimism has been chronicled in other ways. Martin Seligman is considered the founding father of the concept of learned optimism.[2] He has stated that a more positive outlook could result in better health, improved motivation and performance, and more career success.

In one of his most notable experiments, Seligman, working with college swimmers from the University of California, Berkeley, found that having a positive outlook could be useful when overcoming adversity. Each swimmer had been told to swim his or her best race but was then misinformed about their actual time. They were all told that their time was between 1.5 and five seconds slower than it really was.

Seligman had previously tested each swimmer to help determine where they fell on the optimist/pessimist scale. After sharing the faked results with each swimmer, something unexpected happened. When given a second chance, the pessimists performed even worse, while the optimists performed better.[3]

One of those swimmers was Matt Biondi, who would go on to win eight Olympic gold medals.

But it may come as surprise that an optimistic or pessimistic outlook might also have an impact on retirement planning. In a recent article for Think Advisor, author Michael Finke reaches a startling conclusion: the best way to predict whether someone saves more than 10 percent towards their retirement, other than their income level, is whether the individual feels “highly positive” about the future.[4]

Finke, a professor at the American College of Financial Services, is a nationally recognized researcher in retirement income planning, life satisfaction and cognitive aging. In his opinion, optimism has a surprising effect on a number of different financial behaviors, including ideas about longevity, risk tolerance and lifetime income security.

He states conclusively, as implied by Seligman’s research, that optimists are better at overcoming setbacks. A big reason is that they tend to see failure as temporary. For example, optimists believe that they will eventually recover if their investment portfolio crashes. Pessimists tend to believe that failure is permanent.[5]

There are other interesting findings. According to the author, optimists are 67 percent more likely to have made an estimate of how much they need to save for retirement, and 75 percent more likely to save at least 10 percent of their income for retirement. They are also 118 percent more likely to believe that they are financially equipped to live to age 100.[6]

One big question: why are optimists better at preparing for retirement? One reason may be that they expect to live longer. According to Finke “74% of optimists feel highly positive about life in their 80s compared with 43% of non-optimists.” In addition, 48 percent of optimists believe that they will still be able to travel when they get to age 95, compared to 22 percent of everyone else. So, it makes sense that optimists would feel the need to fund a longer—and a more expensive—retirement.

Finke also believes that “[o]ptimism isn’t just a learned trait—it can be cultivated and used to motivate.”[7] That alone may be a good reason to change our way of thinking. In other words, thinking of retirement as a positive stage in your life is a good way to motivate you to save more money now.

[1] Williams, Vivien. “Mayo Clinic Minute: How optimism improves your health.” MayoClinic.org. https://newsnetwork.mayoclinic.org/discussion/mayo-clinic-minute-how-optimism-improves-your-health/ (accessed August 1, 2025).

[2] Moore, Catherine. “Learned Optimism: Is Martin Seligman’s Glass Half Full?” Positivepsychology.com. https://positivepsychology.com/learned-optimism/ (accessed August 1, 2025).

[3] Jewell, Louisa. “How Positive Psychology Affects Olympic Results.” HuffPost. https://www.huffpost.com/archive/ca/entry/how-positive-psychology-affects-olympic-results_b_1737906 (accessed August 1, 2025).

[4] Finke, Michael. “A Surprisingly Powerful Motivator to Plan for Retirement.” ThinkAdvisor.com. https://www.thinkadvisor.com/2025/07/18/a-surprisingly-powerful-motivator-to-plan-for-retirement/ (accessed August 1, 2025).

[5] Id.

[6] Id.

[7] Id.

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