The United States tries to help people save for retirement. We have tax incentives. We have private-sector innovations such as workplace retirement plans that automatically enroll us and increase our savings rates over time.

Even so, we’re probably not saving enough. In 2014, retirement savers in plans administered by Vanguard saved, on average, about 10% of their income, including any matching contributions from their employers. Vanguard recommends a target savings rate of 12% to 15%, including the match.

One reason for the shortfall might be that we don’t speak enough German.

We speak, therefore we save (or not)

Research by Keith Chen, a behavioral economist at UCLA, suggests that there’s a link, maybe a causal link, between a speaker’s language and his or her propensity to save.

Some languages such as English make a grammatical distinction between the present and the future. If I want to describe today’s weather, I say, “It is raining today.” If I want to forecast tomorrow’s weather, I change tenses: “It will rain tomorrow.” Linguists categorize English and languages with similar treatment of tenses as strong future-time reference (strong-FTR) languages.

Weak-FTR languages such as Estonian, German, and Chinese make weaker demarcations between the present and the future. The German phrase “Morgen regnet es” is written in the present tense, Chen explains, but it means “It will rain tomorrow.” (I’ll take his word for it.)

Chen finds that those who speak weak-FTR languages are more likely to save and, on average, accumulate more wealth for retirement than those who speak strong-FTR languages.

Swiss Family Saverson

The chart below, from Chen’s paper, displays savings rates, including both the private and public sectors, for countries in the Organization for Economic Cooperation and Development.

Chen also explores language and saving at the household level. Our propensity to save is influenced by economic and demographic variables such as income and education. Cultural values such as our belief in the importance of family or whether we think most people can be trusted also influence the tendency to save. Even after accounting for these variables, however, Chen finds that a language’s grammatical treatment of the present and future has an effect on savings behavior.

Consider two Swiss families whose income, education, and values are more or less identical. One speaks Swiss German, a weak-FTR language. The other speaks Swiss French, a strong-FTR language. The German-speaking family would, on average, tend to save more.

OECD Savings rate_2015

Source: M. Keith Chen


Your retirement is now

Chen’s research about the way language shapes our “intertemporal behavior” reminded me of work by Hal E. Hershfield.* Hershfield and his collaborators used virtual reality goggles to create a greater sense of identification between twenty-somethings and the retirees they will one day become. Participants who met their future selves through virtual reality goggles were more likely to save for retirement.

But what if we don’t speak German or own a pair of virtual reality goggles? One strategy is to make our long-term financial goals more vivid in the present. We can spend a few minutes imagining our future selves. How will they spend their time? Where will they live? And how much savings will they need to make this imagined future a reality?

We can also describe our savings goals more vividly. If “retirement” sounds like an abstraction, maybe “hiking the Red Rocks of Sedona” or “working with my granddaughter on her science-fair project” can make the future seem less removed from our present.

And there’s always Rosetta Stone.



* Hershfield, Hal E., et. al., 2011. “Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self,” Journal of Marketing Research, Vol. 48.