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Rational and behavioural predictors of pre-retirement cash-outs

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  • Reyers, Michelle
  • van Schalkwyk, Cornelis Hendrik
  • Gouws, Daniël Gerhardus

Abstract

Given the worldwide concern that individuals are not saving sufficiently for retirement, many governments are taking action to try and rectify this tendency. A key focus area is implementing policies to dissuade individuals from accessing accumulated retirement funds when changing jobs. While traditional economic theories assume that individuals act rationally and make optimal decisions without outside intervention, current policy interventions support behavioural theories of decision-making where sub-optimal choices occur due to limitations in human decision-making. Therefore, interventions are based on the assumption that individuals act irrationally. Despite these interventions, many individuals still access their funds suggesting that current interventions may not be sufficiently aligned with the factors influencing decision making in this environment.

Suggested Citation

  • Reyers, Michelle & van Schalkwyk, Cornelis Hendrik & Gouws, Daniël Gerhardus, 2015. "Rational and behavioural predictors of pre-retirement cash-outs," Journal of Economic Psychology, Elsevier, vol. 47(C), pages 23-33.
    • Handle: RePEc:eee:joepsy:v:47:y:2015:i:c:p:23-33
    DOI: 10.1016/j.joep.2015.01.005
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    1. Amitrajeet A. Batabyal & Peter Nijkamp, 2018. "On pessimism and optimism by forward looking agents and the need for pensions," Asia-Pacific Journal of Regional Science, Springer, vol. 2(1), pages 1-14, April.
    2. Batabyal, Amitrajeet & Nijkamp, Peter, 2016. "On Pessimism and Optimism by Forward Looking Agents and the Need for Social Security," MPRA Paper 75965, University Library of Munich, Germany, revised 03 Jan 2017.

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    More about this item

    Keywords

    Pre-retirement cash outs; Life-cycle hypothesis; Behavioural life-cycle hypothesis; Bounded willpower; Bounded rationality;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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