How Can Customized Information Change Financial Plans?
The CRR survey offers a unique data set for analyzing responses to the financial and economic downturn of workers approaching retirement. The main results, which are largely consistent with earlier studies, show a significant rise in expected retirement ages, but little change in retirement saving. The intent to work longer is potentially a powerful response to the loss of retirement wealth. But many workers retire earlier than planned. Increased saving is a more certain and immediate response to a large negative wealth shock. While contributions to retirement savings plans are little changed, workers approaching retirement are spending less and paying down debt, which strengthens their financial position and results in a less costly standard of living that will be easier to sustain in retirement. nThe preliminary analysis of the financial literacy questions indicates some grounds for hope that providing better information can improve individuals’ retirement planning choices. Of those receiving “expert” advice, about 60 percent who initially did not plan to respond to the downturn reconsidered, suggesting that credible information can substantially change both retirement and savings behavior. Another potentially interesting finding is that, among those who had a strong initial preference for working longer to offset losses, receiving a clear explanation of the tradeoff between working longer and saving may convince some to save more as well.