Factors Impacting Low Retirement Savings

32 Pages Posted: 6 Oct 2010 Last revised: 20 Nov 2010

See all articles by Cassandra R. Cole

Cassandra R. Cole

Florida State University - College of Business

Andre P. Liebenberg

University of Mississippi - School of Business Administration

Date Written: June 1, 2010


Prior studies have considered a variety of factors that may account for the variation in wealth across U.S. households. This study adds to existing literature in this area by more closely analyzing a subset of households - those considered low savers. More specifically, we empirically determine which factors most account for the low savings patterns observed by some households focusing on factors that capture financial literacy, financial planning, and risk preferences of households. We find that some factors generally have a strong and significant impact on accumulated savings regardless of the data utilized or the level of savings of the household while other factors appear to only impact the savings of certain households. We also find evidence of a substitution effect for households with employer-sponsored retirement plans. Our results suggest that financial literacy and planning can significantly impact savings patterns. As such, financial education resulting in a better understanding of the important role of personal savings as a component of retirement planning might serve to increase personal savings. This could result in less reliance on government programs such as Social Security to ensure households are able to maintain an acceptable standard of living during retirement.

Keywords: Savings, Employer-Sponsored Retirement Plans, Financial Literacy, Financial Planning

JEL Classification: J26, G23

Suggested Citation

Cole, Cassandra R. and Liebenberg, Andre P., Factors Impacting Low Retirement Savings (June 1, 2010). Available at SSRN: https://ssrn.com/abstract=1687813

Cassandra R. Cole (Contact Author)

Florida State University - College of Business ( email )

423 Rovetta Business Building
Tallahassee, FL 32306-1110
United States

Andre P. Liebenberg

University of Mississippi - School of Business Administration ( email )

PO Box 3986
Oxford, MS 38677
United States

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