What Triggers People to Save for Retirement?

Abstract

We investigate retirement saving decisions through interviews and a broad survey in four countries that investigates what influences changes in savings behaviour. We identify a number of previously unidentified factors that are associated with increased savings. We find that approximately 40% of the respondents in our survey would increase their retirement savings when they receive a raise or they pay off all their debts. We propose these positive triggers be enhanced through employer offered savings matching or other incentives at the time of a raise and financial institution financial planning and product offering when there is an increase in income or when a loan or credit cards are paid off. We also identify negative triggers that may be used to trigger additional savings although we recommend this approach be used with caution. For a subset of the population, fear is a factor that can lead to an increase in savings after observing hardship stories or other events. The difficulty with negative triggers is that the increase to financial health through additional savings may do more harm than good if the increase in fear causes other problems related to physical or emotional health. We suggest focusing on positive triggers.