Heuristics and Biases in Retirement Savings Behavior

CFA Digest ◽  
2008 ◽  
Vol 38 (1) ◽  
pp. 94-94
Author(s):  
Frank T. Magiera
Keyword(s):  
Retirement Savings ◽  
Heuristics And Biases ◽  
Savings Behavior

Misunderstanding Savings Growth: Implications for Retirement Savings Behavior

2011 ◽  
Vol 48 (SPL) ◽  
pp. S1-S13 ◽  
Author(s):  
Craig R.M. Mckenzie ◽  
Michael J. Liersch
Keyword(s):  
Retirement Savings ◽  
Savings Behavior

ESTIMATES OF TAX-DEFERRED RETIREMENT SAVINGS BEHAVIOR

1988 ◽  
Vol 41 (4) ◽  
pp. 561-572
Author(s):  
JULIE H. COLLINS ◽  
JAMES H. WYCKOFF
Keyword(s):  
Retirement Savings ◽  
Savings Behavior

Perceptions of Retirement Adequacy: Evidence From South Africa

2018 ◽  
Vol 29 (2) ◽  
pp. 343-356 ◽  
Author(s):  
Michelle Reyers
Keyword(s):  
Financial Risk ◽  
Time Perspective ◽  
Future Time Perspective ◽  
Risk Tolerance ◽  
Financial Behavior ◽  
Retirement Income ◽  
Retirement Savings ◽  
Savings Behavior ◽  
South Africans ◽  
Income Adequacy

Concerns regarding the adequacy of retirement savings have contributed to the move to encourage better savings behavior. One area of research focuses on understanding the profile of individuals who believe they are preparing adequately for retirement. The current study uses data from a national survey of South Africans to determine how confident workers are about their future retirement income adequacy, and whether behavioral characteristics play a role in their perception of retirement readiness. This study highlights the role that behavioral factors play in perceptions of retirement income adequacy in an African developing market context. In particular, financial risk tolerance, future time perspective, good financial behavior, and self-assessed financial knowledge are all found to be positively related to respondents’ retirement confidence.

Retirement Savings Behavior of Higher Education Employees

2007 ◽  
Vol 48 (5) ◽  
pp. 545-582 ◽  
Author(s):  
James H. Dulebohn ◽  
Brian Murray
Keyword(s):  
Higher Education ◽  
Retirement Savings ◽  
Savings Behavior

scholarly journals Heuristics and Biases in Retirement Savings Behavior

2007 ◽  
Vol 21 (3) ◽  
pp. 81-104 ◽  
Author(s):  
Shlomo Benartzi ◽  
Richard H Thaler
Keyword(s):  
Difficult Problem ◽  
Retirement Savings ◽  
Savings Behavior ◽  
Savings Rate ◽  
Diversification Strategies ◽  
Default Options ◽  
Rules Of Thumb ◽  
Naïve Diversification ◽  
Simple Heuristics

Standard economic theories of saving implicitly assume that households have the cognitive ability to solve the relevant optimization problem and the willpower to execute the optimal plan. Both of the implicit assumptions are suspect. Even among economists, few spend much time calculating a personal optimal savings rate. Instead, most people cope by adopting simple heuristics, or rules of thumb. In this paper, we investigate both the heuristics and the biases that emerge in the area of retirement savings. We examine the decisions employees make about whether to join a savings plan, how much to contribute, and how to invest. Saving for retirement is a difficult problem, and most employees have little training upon which to draw in making the relevant decisions. Perhaps as a result, investors are relatively passive. They are slow to join advantageous plans; they make infrequent changes; and they adopt naive diversification strategies. In short, they need all the help they can get. We discuss the possible role of interventions aiming to improve retirement decision making. Fortunately, many effective ways to help participants are also the least costly interventions: namely, small changes in plan design, sensible default options, and opportunities to increase savings rates and rebalance portfolios automatically.

scholarly journals Less is not more: 401(k) plan information and retirement planning choices

2021 ◽  
pp. 1-21
Author(s):  
Eric Cardella ◽  
Charlene M. Kalenkoski ◽  
Michael Parent
Keyword(s):  
Asset Allocation ◽  
Business School ◽  
Choice Experiment ◽  
Retirement Planning ◽  
Retirement Savings ◽  
Job Seekers ◽  
School Students ◽  
Main Hypothesis ◽  
Savings Behavior ◽  
New Employees

Abstract This paper presents the results of a choice experiment that is designed to examine whether changing how plan information is presented affects planned retirement-savings behavior. The main hypothesis is that providing plan information in a more concise format with helpful recommendations, rather than providing lengthy and detailed information, will alter retirement-planning choices. The specific choices examined include: whether to enroll, how much to contribute, and how to structure (broadly) the asset allocation. The choice experiment is conducted on three different samples: (i) a Qualtrics panel of new employees, (ii) a Qualtrics panel of job seekers, and (iii) a sample of business-school students. Our results suggest that, controlling for demographic and other factors, our main hypothesis was not supported by the data in any of the samples. Thus, the data cast some doubt on the notion that simplifying and condensing the retirement-plan information presented to employees will result in vastly different retirement-planning choices.

Improving the Retirement Prospects of Lower-Wage Workers in a Defined-Contribution World

2007 ◽  
Vol 88 (3) ◽  
pp. 453-462 ◽  
Author(s):  
Judith G. Gonyea
Keyword(s):  
Financial Literacy ◽  
Pension Plans ◽  
Individual Responsibility ◽  
Retirement Savings ◽  
Defined Contribution ◽  
Savings Behavior ◽  
Service Workers ◽  
Retirement Security ◽  
Lower Wage ◽  
The Impact

Lower-wage workers have always faced challenges in saving for their retirement years. As U.S. businesses increasingly adopt defined-contribution pension plans and emphasize individual responsibility and choice, what is the impact of this shift on the working poor? Lack of pension coverage is a significant concern because Social Security alone will not assure a comfortable retirement for lower-income workers. Our survey of more than 300 lower-wage service workers revealed that significant predictors of retirement savings behavior included greater financial literacy as well as greater job stability, stronger workforce attachment, and higher income. Employer-sponsored pension plans were the most frequently used savings option. Based on the findings, we explore the potential impacts of the Pension Protection Act of 2006 (PPA) on lower-wage workers' retirement security and propose policy steps to reduce the risk of poverty being recycled into postretirement years.

scholarly journals Factors Influencing Financial Planning Retirement amongst Employees in The Private Sector in East Coast Malaysia: Literature Review and Research Agenda

2019 ◽  
Author(s):  
Hasnah Haron ◽  
Nur Nadiah Salihah Mat Razali ◽  
Fazeeda Mohamad
Keyword(s):  
Private Sector ◽  
Social Cognitive ◽  
East Coast ◽  
Retirement Age ◽  
Main Concern ◽  
Retirement Savings ◽  
Retirement Plans ◽  
Savings Behavior ◽  
The Social ◽  
Biological Aspects

Gerontology is the main concern about the social, psychology, social, cognitive and biological aspects of aging. This paper focuses on the aging population in Malaysia as there is an increase in the number of 60 years old in the country. Malaysia will be labeled “old status country” in the year 2035 according to the Department of Statistics Report (2016). There is a lack of awareness to save for old age amongst Malaysians. Malaysians tend to procrastinate in this issue thinking that their retirement is still a long way off. This paper will identify the Malaysians behavior in making forecasting planning for their retirement. It comprises the predictors of retirement plans based on the attitude for savings, level of consumption, investing wisely, and financing consumption during the pre-retirement period. This study will conduct using the quantitative approach focusing on the employees in the private sector with at least ten years left of service before achieving the retirement age. The study will use regression analysis to analyses the data. It is hoped that this finding will confirm the relevance of planning constructs and enhance retirement savings behavior, following establishes a need to improve levels of financial knowledge in society.

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