Time Will Tell: Determinants and Significance of Financial Planning Horizon Changes

23 Pages Posted: 23 Aug 2018 Last revised: 26 Feb 2019

See all articles by Zhikun Liu

Zhikun Liu

Employee Benefit Research Institute

Russell N. James

Texas Tech University

Abbas Aboohamidi

Texas Tech University

Date Written: May 1, 2018


Recent studies have demonstrated that individuals' financial planning horizons significantly impact their economic decisions, such as saving propensities, credit card usage behaviors, investment choices, retirement decisions, as well as estate planning engagements. Motivated by the profound implications and impacts of people's financial planning horizon variations, this study investigates the determinants of individuals' financial planning horizons both cross-sectionally and longitudinally. Using the Health and Retirement Study (HRS) data, the analyses in this paper reveal that older American adults' financial planning horizons are strongly determined by their self-perceived life expectancy. Over time, the changes in self-perceived life expectancy, marital and retirement status, health conditions, and wealth level will cause individuals to shift their financial planning horizons. The insight gained in this study helps financial planners to better understand the factors driving the changes of their clients' financial planning horizons and how to encourage them to expand their planning horizons.

Keywords: Financial Planning Horizon, Self-perceived Life Expectancy, Financial Decision Making

JEL Classification: D12, G02, D10, G4

Suggested Citation

Liu, Zhikun and James, Russell N. and Aboohamidi, Abbas, Time Will Tell: Determinants and Significance of Financial Planning Horizon Changes (May 1, 2018). 2019 Academic Research Colloquium for Financial Planning and Related Disciplines, Available at SSRN: https://ssrn.com/abstract=3213013 or http://dx.doi.org/10.2139/ssrn.3213013

Zhikun Liu (Contact Author)

Employee Benefit Research Institute ( email )

1100 13th Street, NW
Suite 878
Washington, DC 20005-4204
United States

Russell N. James

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

Abbas Aboohamidi

Texas Tech University ( email )

Box 42132
Lubbock, TX 79409-2132
United States
8069283746 (Phone)

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