The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings
As employer-sponsored savings vehicles, like 401(k)s, become a major source of retirement income for millions of Americans, personal biases can have an outsized impact on retirement security.
The authors examine how personal biases affect retirement savings. Specifically, they look at people’s tendency to put off saving for retirement and the extent to which they underestimate the positive impact of compound interest.
Data collection took place between August 2014 and June 2015 through two online surveys. Respondents were selected at random from two independent sources. In total, 2,601 respondents completed the first survey and 2,393 completed the second.