What Personality Says about Your Wealth

A person’s finances are not determined simply by obvious factors like how much they earn – personality can also make a difference.

A new study has identified three personality traits that play a role in how individuals handle their nest eggs. For example, conscientious people – self-disciplined planners – are more careful and have more wealth at the end of their lives.

The University of Illinois researchers looked at two types of wealth: within employer retirement plans and outside of these plans. They did not find a connection between the wealth levels in employer plans and various personality traits, a result they anticipated because retirement wealth has more to do with a retiree’s work history and earnings.

But they did find a connection between personality and the wealth individuals hold outside of their retirement plans. Even though the majority of retirees have very little of this wealth, it’s still interesting to see the connections.

For example, retirees who are open to new experiences – they are imaginative, proactive, and broad-minded – behave like conscientious people and preserve their wealth, especially after their mid-60s, according to the study, which was conducted for NBER’s Retirement and Disability Research Center.

Agreeableness works in the opposite direction. Agreeable people are known for being soft-hearted, friendly and helpful – they also tend to care less about money or about managing it. Not surprisingly, they have less wealth.

Of course, the economy, as well as whether someone is healthy, also influence wealth levels, the researchers found.

But the reasons some people have more than others go well beyond dollars and cents.

To read the entire study, authored by Yilan Xu, Jeffrey Brown, and Brent Roberts, see “Can Personality Help Explain Wealth Decumulation Behavior?”

The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA or any agency of the federal government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.