Skip to main content Accessibility help
×
×
Home

Intention and action in retirement preparation

  • JOB M.T. KRIJNEN (a1), MARCEL ZEELENBERG (a2), SEGER M. BREUGELMANS (a3) and ANNA VAN DER SCHORS (a4)

Abstract

Many people delay their preparation for retirement. Policy-makers often attempt to motivate people to take timely action by increasing the perceived importance of retirement saving, yet the effectiveness of such strategies can be doubted. We examined why a strategy of emphasizing importance may be ineffective by distinguishing between intention to prepare for retirement and action in actually taking steps toward preparation. Two surveys (n1 = 1171; n2 = 832) showed that importance and difficulty were both predictive of people's intentions to prepare for retirement, but that difficulty was a much stronger predictor of people's actual actions. Using data from an additional survey (n3 = 986), a series of follow-up tests provided further evidence that difficulty of retirement preparation is a stronger predictor of inaction than importance of retirement saving. These findings help explain why policies aimed at simplifying retirement preparation (e.g., automatic enrollment) have been more successful than policies aimed at increasing the importance of retirement saving (e.g., tax advantages).

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Intention and action in retirement preparation
      Available formats
      ×

      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Intention and action in retirement preparation
      Available formats
      ×

      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Intention and action in retirement preparation
      Available formats
      ×

Copyright

Corresponding author

*Correspondence to: UCLA Anderson School of Management, 110 Westwood Plaza, Los Angeles, CA 90095, USA. Email: job.krijnen@anderson.ucla.edu

References

Hide All
Ainslie, G. (1975), ‘Specious reward: A behavioral theory of impulsiveness and impulse control’, Psychological Bulletin, 82(4): 463482.
Ajzen, I. (1991), ‘The theory of planned behavior’, Organizational Behavior and Human Decision Processes, 50(2): 179211.
Akerlof, G. A. (1991), ‘Procrastination and obedience’, American Economic Review, 81(2): 119.
Ameriks, J., Caplin, A., and Leahy, J. (2003), ‘Wealth accumulation and the propensity to plan’, Quarterly Journal of Economics, 118(3): 10071047.
Antolín, P., De Serres, A., and De la Maisonneuve, C. (2004), Long-term budgetary implications of tax-favoured retirement saving plans, OECD Economic Studies No. 39.
Attanasio, O. P., Banks, J. and Wakefield, M. (2004), Effectiveness of tax incentives to boost (retirement) saving: Theoretical motivation and empirical evidence, The Institute for Fiscal Studies Working Paper 4.
Bell, C. (2016), Survey: Most Americans have financial regrets, particularly about saving. Retrieved from http://www.bankrate.com/finance/consumer-index/financial-security-charts-0516.aspx.
Benartzi, S., Beshears, J., Milkman, K. L., Sunstein, C. R., Thaler, R. H., Shankar, M. and Galing, S. (2017), ‘Should governments invest more in nudging?’, Psychological Science, 28(8): 10411055.
Benartzi, S. and Thaler, R. H. (2013), ‘Behavioral economics and the retirement savings crisis’, Science, 339(6124): 11521153.
Beshears, J., Choi, J. J., Laibson, D. and Madrian, B. C. (2010), ‘The impact of employer matching on savings plan participation under automatic enrollment’, In Wise, D. A. (Ed.), Research findings in the economics of aging, (pp. 311327). Chicago, IL: University of Chicago Press.
Butt, A., Donald, M. S., Foster, F. D., Thorp, S. and Warren, G. J. (2018), ‘One size fits all? Tailoring retirement plan defaults’, Journal of Economic Behavior & Organization, 145: 546566.
Carroll, G. D., Choi, J. J., Laibson, D., Madrian, B. C. and Metrick, A. (2009), ‘Optimal defaults and active decisions’, Quarterly Journal of Economics, 124(4): 16391674.
Chetty, R., Friedman, J. N., Leth-Peterson, S., Nielsen, T. and Olsen, T. (2014), ‘Active vs. passive decisions and crowd-out in retirement savings accounts: Evidence from Denmark’, Quarterly Journal of Economics, 129(3): 11411219.
Choi, J. J., Laibson, D., and Madrian, B. C. (2011), ‘$100 bills on the sidewalk: Suboptimal investment in 401(k) plans’, Review of Economics and Statistics, 93(3): 748763.
Choi, J. J., Laibson, D., Madrian, B. C., and Metrick, A. (2002), ‘Defined contribution pensions: Plan rules, participant decisions and the path of least resistance’, In Poterba, J. M. (Ed.), Tax policy and the economy, Vol. 16, (pp. 67113). Cambridge, MA: MIT Press.
Engelhardt, G. V., and Kumar, A. (2007), ‘Employer matching and 401(k) saving: Evidence from the health and retirement study’, Journal of Public Economics, 91(10): 19201943.
Fernandes, D., Lynch, J. G. Jr, and Netemeyer, R. G. (2014), ‘Financial literacy, financial education, and downstream financial behaviors’, Management Science, 60(8): 18611883.
Fischer, C. (1999), Read this paper even later: Procrastination with time-inconsistent preferences, Resources for the Future Discussion Paper 99–20.
Gallup (2016), Americans' Financial Worries Edge Up in 2016. Retrieved from https://news.gallup.com/poll/191174/americans-financial-worries-edge-2016.aspx.
Gallup (2017a), Americans' Financial Anxieties Ease in 2017. Retrieved from https://news.gallup.com/poll/210890/americans-financial-anxieties-ease-2017.aspx.
Gallup (2017b), Financial Worry (Trends). Retrieved from https://news.gallup.com/poll/210893/financial-worry-trends.aspx.
Gollwitzer, P. M. (1999), ‘Implementation intentions: Strong effects of simple plans’, American Psychologist, 54(7): 493503.
Hadar, L., Sood, S., and Fox, C. R. (2013), ‘Subjective knowledge in consumer financial decisions’, Journal of Marketing Research, 50(3): 303316.
Hershfield, H. E., John, E. M. and Reiff, J. S. (2018), ‘Using vividness interventions to improve financial decision making’, Policy Insights from the Behavioral and Brain Sciences, 5(2): 209215.
Keim, D. B., and Mitchell, O. S. (2018), ‘Simplifying choices in defined contribution retirement plan design: A case study’, Journal of Pension Economics & Finance, 17(3): 363384.
Kim, K. T. and Hanna, S. D. (2013), ‘Does financial sophistication matter in retirement preparedness of U.S. households? Evidence from the 2010 Survey of Consumer Finances’, Consumer Interests Annual, 59. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291600.
Krijnen, J. M. T., Zeelenberg, M. and Breugelmans, S. M. (2015), ‘Decision importance as a cue for deferral’, Judgment and Decision Making, 10(5): 407415.
Krijnen, J. M. T., Zeelenberg, M. and Breugelmans, S. M. (2016), Overcoming inertia in retirement saving: Why now and how?, Netspar Survey Paper 47.
Liberman, N., and Trope, Y. (1998), ‘The role of feasibility and desirability considerations in near and distant future decisions: A test of temporal construal theory’, Journal of Personality and Social Psychology, 75(1): 518.
Liberman, N., Trope, Y., McCrea, S. M., and Sherman, S. J. (2007), ‘The effect of level of construal on the temporal distance of activity enactment’, Journal of Experimental Social Psychology, 43(1): 143149.
Linzer, D. A. and Lewis, J. B. (2011), ‘poLCA: An R package for polytomous variable latent class analysis’, Journal of Statistical Software, 42(10): 129.
Loewenstein, G., and Chater, N. (2017), ‘Putting nudges in perspective’, Behavioural Public Policy, 1(1): 2653.
Lusardi, A. and Mitchell, O. (2007), ‘Baby boomers retirement security: The role of planning, financial literacy and housing wealth?’, Journal of Monetary Economics, 54(1): 205224.
Lusardi, A., and Mitchell, O. S. (2011), ‘Financial literacy around the world: An overview’, Journal of Pension Economics & Finance, 10(4): 497508.
Madrian, B. C., and Shea, D. F. (2001), ‘The power of suggestion: Inertia in 401(k) participation and savings behavior’, Quarterly Journal of Economics, 116(4): 11491187.
McCrea, S. M., Liberman, N., Trope, Y., and Sherman, S. J. (2008), ‘Construal level and procrastination’, Psychological Science, 19(12): 13081314.
McCutcheon, A. C. (1987), Latent Class Analysis, Newbury Park, CA: Sage.
Munnell, A. H. (2015), Falling short: The coming retirement crisis and what to do about it, Center for Retirement Research at Boston College Report 15–7.
Nibud (2015), De Nederlanders en hun pensioen: Hoe mensen financieel zijn voorbereid op hun pensioen. Retrieved from https://www.nibud.nl/wp-content/uploads/Onderzoeksrapport-Nibud-De-Nederlanders-en-hun-pensioen_okt2015.pdf.
OECD (2009), Pensions at a glance 2009: Retirement-income systems in OECD countries, Paris, France: OECD Publishing. Retrieved from: https://doi.org/10.1787/pension_glance-2009-en.
OECD (2015), Pensions at a glance 2015: OECD and G20 indicators, Paris, France: OECD Publishing. Retrieved from: http://dx.doi.org/10.1787/pension_glance-2015-en.
OECD (2017), Pensions at a glance 2017: OECD and G20 indicators, Paris, France: OECD Publishing. Retrieved from: http://dx.doi.org/10.1787/pension_glance-2017-en.
O'Donoghue, T., and Rabin, M. (1999), ‘Doing it now or later’, American Economic Review, 89(1): 103124.
O'Donoghue, T., and Rabin, M. (2001), ‘Choice and procrastination’, Quarterly Journal of Economics, 116(1): 121160.
Rogers, T., Milkman, K. L., John, L. K., and Norton, M. I. (2015), ‘Beyond good intentions: Prompting people to make plans improves follow-through on important tasks’, Behavioral Science & Policy, 1(2): 3341.
Steel, P. (2007), ‘The nature of procrastination: a meta-analytic and theoretical review of quintessential self-regulatory failure’, Psychological Bulletin, 133(1): 6594.
Strotz, R. H. (1955), ‘Myopia and inconsistency in dynamic utility maximization’, Review of Economic Studies, 23(3): 165180.
Thaler, R. H. and Benartzi, S. (2004), ‘Save more tomorrow: Using behavioral economics to increase employee saving’, Journal of Political Economy, 112(S1): 164187.
Trope, Y., and Liberman, N. (2003), ‘Temporal construal’, Psychological Review, 110(3): 403421.
Vallacher, R. R., and Wegner, D. M. (1987), ‘What do people think they're doing? Action identification and human behavior’, Psychological Review, 94(1): 315.
Woolley, K., and Fishbach, A. (2016), ‘For the fun of it: Harnessing immediate rewards to increase persistence in long-term goals’, Journal of Consumer Research, 42(6): 952966.
Woolley, K., and Fishbach, A. (2017), ‘Immediate rewards predict adherence to long-term goals’, Personality and Social Psychology Bulletin, 43(2): 151162.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Behavioural Public Policy
  • ISSN: 2398-063X
  • EISSN: 2398-0648
  • URL: /core/journals/behavioural-public-policy
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×
Type Description Title
PDF
Supplementary materials

Krijnen et al. supplementary material
Krijnen et al. supplementary material 1

 PDF (326 KB)
326 KB

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed