Browse > Article
http://dx.doi.org/10.6115/ijhe.2016.17.2.31

The Role of Self-Control on Retirement Preparedness of US Households  

Kim, Kyoung Tae (Department of Consumer Sciences, University of Alabama)
Lee, Jae Min (Department of Family Consumer Science, Minnesota State University)
Hong, JiHyun Eunice (Department of Living Culture and Consumer Science, Sung Shin Women's University)
Publication Information
International Journal of Human Ecology / v.17, no.2, 2016 , pp. 31-42 More about this Journal
Abstract
We examine the self-control problems of U.S households and their effects on households' retirement preparedness based on the Behavioral Life-Cycle Hypothesis. Using the 2010 Survey of Consumer Finances dataset, the level of retirement adequacy was estimated with income replacement ratio (IRR), and only 42% of households were adequately prepared for retirement. Results from logistic regression analysis indicated that households with loan payment and saving self-control problems were less likely to be prepared adequately for retirement compared to those without such problems. Age, education, race/ethnicity, marital status, employment status, retirement plans, expected retirement age and risk tolerance were significantly related to retirement preparedness. This study provides financial educator and researchers with suggestions on how to help household make a better retirement plan.
Keywords
self-control; retirement preparedness; retirement savings; retirement planning; survey of consumer finances;
Citations & Related Records
Times Cited By KSCI : 3  (Citation Analysis)
연도 인용수 순위
1 Baumeister, R. F. (2002). Yielding to temptation: Self-control failure, impulsive purchasing, and consumer behavior. Journal of Consumer Research, 28(4), 670-676.   DOI
2 Benartzi, S., & Thaler, R. (2013). Behavioral economics and the retirement saving crisis. Science, 339, 1152-1153.   DOI
3 Benhabib, J., & Bisin, A. (2005). Modeling internal commitment mechanisms and self-control: A neuroeconomics approach to consumption-saving decisions. Games and Economic Behavior, 52(2), 460-492.   DOI
4 Abel, B. J., & Hayslip, B. J. (1987). Locus of control and retirement preparation. Journal of Gerontology, 42(2), 165-167.   DOI
5 Bertaut, C. C., Haliassos, M., & Reiter, M. (2008). Credit card debt puzzles and debt revolvers for self-control. Review of Finance, 13(4), 657-692.   DOI
6 Beverly, S. G., McBride, A. M., & Schreiner, M. (2003). A framework of asset-accumulation stages and strategies. Journal of Family and Economic Issues, 24(2), 143-156.   DOI
7 Brown, J., Liebman, J., & Wise, D. (2009). Social Security Policy in a Changing Environment. Chicago, IL: University of Chicago Press.
8 Carroll, G. D., Choi, J., Laibson, D., Madrian, B., & Metrick, A. (2009). Optimal defaults and active decisions. Quarterly Journal of Economics, 124(4), 1639-74.   DOI
9 Chen, C. C. (2007). Changes in retirement adequacy, 1995-2004: Accounting for retirement stages. Dissertation, The Ohio State University.
10 Choi, J., Laibson, D., & Madrian, B. (2004). Plan design and 401(k) savings outcomes. National Tax Journal, 57(2), 275-298.   DOI
11 Ersner-Hershfield, H., Garton, M. T., Ballard, K., Samanez-Larkin, G. R., & Knutson, B. (2009). Don't stop thinking about tomorrow: Individual differences in future self-continuity account for saving. Judgment and Decision Making, 4(4), 280-286.
12 Farkas, S., & Johnson, J. (1997). Miles to go: A status report on Americans' plans for retirement. New York: Public Agenda.
13 Gathergood, J. (2012). Self-control, financial literacy and consumer over-indebtedness. Journal of Economic Psychology, 33(3), 590-602.   DOI
14 Graham, F., & Isaac, A. (2002). The behavioral life-cycle theory of consumer behavior: survey evidence. Journal of Economic Behavior & Organization, 48(4), 391-401.   DOI
15 Gul, F., & Pesendorfer, W. (2001). Temptation and self -control. Econometrica, 69(6), 1403-1435.   DOI
16 Gul, F., & Pesendorfer, W. (2004). Self-control and the theory of consumption. Econometrica, 72(1), 119-158.   DOI
17 Hanna, S. D., & Kim, K. (2014). Time preference assumptions in normative analyses of household financial decisions. Applied Economics Letters, 21(9), 609-612.   DOI
18 Haws, K. L., Bearden, W. O., & Nenkov, G. Y. (2012). Consumer spending self-control effectiveness and outcome elaboration prompts. Journal of the Academy of Marketing Science, 40(5), 695-710.   DOI
19 Heath, C., & Soll, J. (1996). Mental budgeting and consumer decisions. Journal of Consumer Research, 23(1), 40-52.   DOI
20 Karlsson, N., Garling, T., & Selart, M. (1997). Effects of mental accounting on intertemporal choices. Göteborg Psychological Reports, 27(5), 1-17.
21 Kim, H. (2005). Allowance usage practices and saving behavior among children, International Journal of Human Ecology, 6(2), 51-61.
22 Kim, K., Hanna, S. D. & Chen, S. C. (2014). Consideration of retirement income stages in planning for retirement, Journal of Personal Finance, 13(1), 52-64.
23 Kim, K., & Hanna, S. D. (2015). Does financial sophistication matter in retirement preparedness? Journal of Personal Finance, 14(2), 9-20.
24 Kim, K., Lee, J. & Hong, E. O. (2013) Assessing the effect of selfcontrol on retirement preparedness of U.S households, Consumer Interests Annual, Volume 59, 2013. Available at SSRN: https://ssrn.com/abstract=2371964
25 Laibson, D. (1997). Golden eggs and hyperbolic discounting. The Quarterly Journal of Economics, 112(2), 443-478.   DOI
26 Laibson, D. I., Repetto, A., Tobacman, J., Hall, R. E., Gale, W. G., & Akerlof, G. A. (1998). Self-control and saving for retirement. Brookings Papers on Economic Activity, 1998(1), 91-196.   DOI
27 Lee, J., & Hanna, S. D. (2015). Savings goals and saving behavior from a perspective of Maslow's hierarchy of needs. Journal of Financial Counseling and Planning, 26(2), 129-147.
28 Levin, L. (1998). Are assets fungible? Testing the behavioral theory of life-cycle savings. Journal of Economic Behavior & Organization, 36(1), 59-83.   DOI
29 Lindamood, S., Hanna, S. D., & Bi, L. (2007). Using the Survey of Consumer Finances: Some methodological considerations and issues. Journal of Consumer Affairs, 41(2), 195-222.   DOI
30 Loewenstein, G. F. (1996). Out of control: Visceral influences on behavior. Organizational Behavior and Human Decision Processes, 65(3), 272-292.   DOI
31 Loewenstein, G., Prelec, D., & Weber, R. (1999). What, me worry? A psychological perspective on economic aspects of retirement. In H. Aaron (Ed.) Behavioral Dimensions of Retirement Economics, (pp. 215-252). Washington, D.C: Brookings Institution Press.
32 Munnell, A. H., Rutledge, M. S., & Webb, A. (2014). Are retirees falling short? Reconciling the conflicting evidence (No. w16). Boston, MA: Center for Retirement Research at Boston College.
33 Lusardi, A., & Mitchell, O. S. (2007). Baby boomer retirement security: The roles of planning, financial literacy, and housing wealth. Journal of monetary Economics, 54(1), 205-224.   DOI
34 Mansfield, P. M., Pinto, M. B., & Parente, D. H. (2003). Self-control and credit-card use among college students. Psychological Reports, 92(3c), 1067-1078.   DOI
35 Meier, S., & Sprenger, C. (2010). Present-biased preferences and credit card borrowing. American Economic Journal: Applied Economics, 2(1), 193-210.   DOI
36 O'Donoghue, T., & Rabin, M. (1999). Procrastination in Preparing for Retirement. Henry A. (Ed.) Behavioral Dimensions of Retirement Economics, (pp. 125-156). Washington, D.C: Brookings Institution Press.
37 Palmer, B. A. (1992). Establishing retirement income objectives: the 1991 retire project. Benefits Quarterly, Third Quarter, 8(3), 6-15.
38 Palmer, B. A. (1994). Retirement income replacement ratios: An update. Benefits Quarterly, Second Quarter, 10(2), 59-75.
39 Park, S., Cho, S., & Yoon, H. (2012). The relationship between future orientation, regulatory focus, and need for cognition and healthy menu choices, International Journal of Human Ecology, 13(2), 171-181.   DOI
40 Peetz, J. & Buehler, R. (2009). Is there a budget fallacy? The role of savings goals in the prediction of personal spending. Personality and Social Psychology Bulletin, 35(12), 1579-1591.   DOI
41 Rha, J.Y., Montalto, C., & Hanna, S.D. (2006). The effect of selfcontrol mechanisms on household saving behavior. Financial Counseling and Planning Education, 17(2), 3-16.
42 Thaler, R. H. (1990). Anomalies: Saving, fungibility, and mental accounts. Journal of Economic Perspectives, 4(1), 193-205.   DOI
43 Scholz, J., Seshadri, A., & Khitatrakun, S. (2006). Are Americans saving "optimally" for retirement? Journal of Political Economy, 114(4), 607-643.   DOI
44 Shefrin, H. M., & Thaler, R. H. (1988). The behavioral life cycle hypothesis. Economic Inquiry, 26(4), 609-643.   DOI
45 Strotz, R. H. (1956). Myopia and inconsistency in dynamic utility maximization. Review of Economic Studies, 23(3), 165-180.   DOI
46 Thaler, R. H., & Benartzi, S. (2004). Save more $tomorrow^{TM}$: Using behavioral economics to increase employee saving. Journal of Political Economy, 112(S1), S164-S187.   DOI
47 Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2), 449-472.   DOI
48 Yao, R., Hanna, S. D., & Montalto, C. P. (2003). The capital accumulation ratio as an indicator of retirement adequacy. Financial Counseling and Planning, 14(2), 1-11.
49 Yuh, Y., Montalto, C. P., & Hanna, S. D. (1998). Are Americans prepared for retirement? Financial Counseling and Planning, 9(1), 1-13.
50 Ainslie, G. (1975). Specious reward: A behavioral theory of impulsiveness and impulse control. Psychological Bulletin, 82(4), 463-496.   DOI
51 Ameriks, J., Caplin, A., Leahy, J., & Tyler, T. (2007). Measuring selfcontrol problems. The American Economic Review, 97(3), 966-972.   DOI
52 Ando, A., & Modigliani, F. (1963). The "life cycle" hypothesis of saving: Aggregate implications and tests. American Economic Review, 53(1), 55-84.
53 Ariely, D., & Wertenbroch, K. (2002). Procrastination, deadline, and performance: Self-control by recommitment. Psychological Science, 13(3), 219-224.   DOI
54 Baek, E. (2010). Information sources for investment decisions of U.S. elderly consumers, International Journal of Human Ecology, 11(2), 51-61.
55 Banks, J., O'Dea, C., & Oldfield, Z. (2010). Cognitive function, numeracy and retirement saving trajectories. The Economic Journal, 120(548), 381-410.   DOI