Can’t Save or Won’t Save – The Role of Financial Resilience in Retirement Saving Among Young British Adults.

Abstract

This study examines the role of human agency in additional retirement saving activity for British adults in their 30s and 40s on the premise that individuals are increasingly encouraged to save more and from earlier on. Young adults’ inadequate retirement saving has largely been explained by undesirable attitudinal or behavioural tendencies, such as myopia, the disinclination to save (‘won’t save’) or a simple lack of financial resources (‘can’t save’). The study examines to what extent these two aspects may help to explain young adults’ retirement saving decision-making processes. Using a modified version of Hershey and colleagues’ Model of Financial Planning, the study analyses how attitudinal and behavioural tendencies and their socio-economic characteristics interact, and to what extent such interaction is meaningful. Results show that financial resilience, which refers to individuals’ everyday financial behaviours, is the strongest predictor of additional retirement saving activity beyond formal pensions. This quality, however, is very closely connected to an individual’s socio-economic situation, such as household income and homeownership. These findings suggest that individuals’ attitudes and behaviours are highly relevant to understanding retirement saving decisions but are also intertwined with their social and economic arrangements.