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Save more or retire later? Retirement planning heterogeneity and perceptions of savings adequacy and income constraints

Many individuals do not contribute sufficiently towards their pension savings to support an income level at their planned retirement age that ensures their desired standard of living. There are two main strategies that they can follow to overcome the resulting gap: they can either increase their savings or plan to retire later.

11. oktober 2016

While most previous research has investigated the intentions of individuals to use one of these strategies separately, in this study we investigate how intentions to follow these separate strategy may be interrelated. In particular, we argue that lower perceived savings adequacy will increase the savings intentions of individuals, but that, depending on the level of their perceived current income constraints, they either form stronger intentions to save more (if they perceive weak income constraints) or to retire later (if they perceive strong constraints). Results from an online survey among 1,472 working individuals in the Netherlands provide support for the predicted effects.