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Saving for the future: Dynamic effects of time horizon

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  • Rolison, Jonathan J
  • Hanoch, Yaniv
  • Wood, Stacey

Abstract

Why is the public so underprepared for retirement? We studied the saving behavior of a large cross-section of adults to investigate age differences in motivations to save across adulthood. Our investigation revealed that both a future oriented mindset as well as adequate financial knowledge may be necessary for younger adults to engage in saving for their retirement. This finding is consistent with a theoretical account in which younger adults who have long time horizons prioritize preparatory goals and knowledge seeking. As time horizons shorten, motivations to realize goals replace motivations to gather knowledge. Accordingly, future oriented attitudes were more directly associated with saving with advancing age, such that future oriented adults who were approaching retirement saved regardless of their level of financial knowledge. Our findings reveal a dynamic character of saving tendencies across adulthood and imply age differences in the psychological factors that motivate saving behavior.

Suggested Citation

  • Rolison, Jonathan J & Hanoch, Yaniv & Wood, Stacey, 2017. "Saving for the future: Dynamic effects of time horizon," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 70(C), pages 47-54.
    • Handle: RePEc:eee:soceco:v:70:y:2017:i:c:p:47-54
    DOI: 10.1016/j.socec.2017.07.006
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    2. Ivan Skliarov & ?ukasz Goczek, 2024. "What Makes a Household Wealthy? Is it Reckless Risk-Taking or Careful Planning?," LWS Working papers 42, LIS Cross-National Data Center in Luxembourg.
    3. Tomar, Sweta & Kent Baker, H. & Kumar, Satish & Hoffmann, Arvid O.I., 2021. "Psychological determinants of retirement financial planning behavior," Journal of Business Research, Elsevier, vol. 133(C), pages 432-449.
    4. Xie, Xiaohong & Osińska, Magdalena & Szczepaniak, Małgorzata, 2023. "Do young generations save for retirement? Ensuring financial security of Gen Z and Gen Y," Journal of Policy Modeling, Elsevier, vol. 45(3), pages 644-668.
    5. Jozsef MENYHERT & Gabor SUVEGES, 2023. "The Self-Care In Payg Pension System Of Students," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 8(2), pages 73-81, September.

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