How many times have you taken some action only to regret it afterwards? In the world of financial decision-making this happens all the time. Sometimes it’s regretting the purchase of some investment whose value subsequently drops. Possibly it’s regretting not having purchased some investment which your neighbor has been bragging about having made a killing on. What prompted this post is a recent survey by the Massachusetts Mutual Life Insurance Company on filing strategies for Social Security (SS) benefits. They found that 30% of respondents filed at the earliest age possible (age 62 or in certain cases younger), which reduces future monthly payments to less than half of what they would have been had they waited until age 70. What’s interesting is the further finding that almost 40% wished they had filed later.

Most of the early filers reported that they did so out of necessity. That is, they were facing health issues or job loss or simply had not saved enough while working to be able to delay SS payments to a future year. The majority also felt that they had sufficient information about when to file for SS retirement benefits, suggesting that the decision was not considered to have been a mistake. Since the consequent reduction in retirement benefits is something that they will be living with for the remainder of their lives, it’s not surprising that they would be regretting, if not the decision itself, perhaps the circumstances that forced them to make it. But what impact on their well-being will these feelings of regret engender?

Melanie Greenberg in Psychology Today describes regret as feeling a sense of sorrow at what might have been or wishing we could undo a previous choice that we made. Research reported in the AARP Newsletter finds that regret negatively affects hormonal and immune system functioning and can impede the ability to recover from stressful life events by extending their emotional reach for years. But there is a positive side. Regret can help motivate younger people to learn from mistakes and to take corrective action. Neal Roese of Northwestern University found that regret fulfills five functions: (1) making sense of the world, (2) avoiding future negative behaviors, (3) gaining insight, (4) achieving social harmony, and (5) improving ability to approach desired opportunities (presumably because we regret past passivity).

Unfortunately, when it comes to financial decision-making, the positive benefits have less value to retirees and even many pre-retirees. That’s because at that stage of life there is less time left to correct any financial mistakes that may have been made earlier. And the less opportunity one has to change the situation, the more likely regret can create chronic stress that can damage the mind and the body. To avoid having regret negatively impact our future quality of life, it behooves us to gather as much knowledge and advice as we can right now so that the financial decisions we make today will have a positive impact on our future goals. The last thing we want is to live a retirement marred by regrets about the financial choices we made in the past.