Wharton Pension Research Council Working Papers

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Working Paper

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With the growth of defined contribution retirement plans, plan participants are increasingly expected to behave like financial planners, optimizing a series of saving, investment, tax, and spending decisions throughout their lives. Yet just as individuals have varying tastes in saving, we illustrate that participants in retirement plans have varying tastes for the types of financial planning activities needed to ensure success in those plans. Workers can be classified into five “money attitude” segments, with markedly different preferences for savings behavior, equity risk taking, and retirement planning. Our analysis suggests that a significant group of workers lacks the psychological attitudes or interests needed to maximize retirement security. Our results have important implications for the degree of participant direction in retirement programs; the role of negative elections and default options in plans, and the design of programs to enhance worker financial literacy.


The published version of this Working Paper may be found in the 2004 publication: Pension Design and Structure: New Lessons from Behavioral Finance.

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©2003 Pension Research Council of the Wharton School of the University of Pennsylvania. All Rights Reserved

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Economics Commons



Date Posted: 04 September 2019