The Role of Self-Control on Retirement Preparedness of US Households

Abstract

We examine the self-control problems of U.S households and their effects on households’ retirement preparedness based on the Behavioral Life-Cycle Hypothesis. Using the 2010 Survey of Consumer Finances dataset, the level of retirement adequacy was estimated with income replacement ratio (IRR), and only 42% of households were adequately prepared for retirement. Results from logistic regression analysis indicated that households with loan payment and saving self-control problems were less likely to be prepared adequately for retirement compared to those without such problems. Age, education, race/ethnicity, marital status, employment status, retirement plans, expected retirement age and risk tolerance were significantly related to retirement preparedness. This study provides financial educator and researchers with suggestions on how to help household make a better retirement plan.