The Association Between Retiree Migration and Retirement Satisfaction

Pearson, Blain; Kalenkoski, Charlene M.

doi:10.1891/jfcp-20-00064

Cited by 11 publications

(7 citation statements)

References 22 publications

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“…Risk preference is measured using the question, “Which of the following statements come closet to describing the amount of financial risk that you are willing to take when you save or make investments?” The responses which range from 1 to 4 are reverse coded such that 1 equals “not willing to take any financial risks,” 2 equals “take average financial risks expecting to earn average returns,” 3 equals take above average financial risks expecting to earn above average returns,” and 4 means “take substantial financial risks expecting to earn substantial returns.” This question for measuring risk preferences was first asked in the Survey of Consumer Finances. We include risk preference because some studies have found that annuitization decreases with risk aversion (Bommier and Le Grand, 2014; d'Albis and Thibault, 2018; Pearson and Guillemette, 2020).…”

Section: Methodsmentioning

confidence: 99%

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The nexus between investor sophistication and annuity insurance ownership: evidence from FINRA's National Financial Capability Study

Korankye

Pearson

Salehi

2022

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PurposeAlthough annuitization provides insurance against longevity risk that can benefit households, researchers have uncovered an annuitization puzzle, which suggests households are reluctant to annuitize their wealth. This study contributes to the discussions on the annuitization puzzle by examining investor sophistication and owning annuities in non-retirement accounts.Design/methodology/approachThe study utilizes data from the 2018 U S National Financial Capability Study (NFCS). The empirical analyses are based on logistic regression estimates of annuity ownership on investor sophistication. Interpretations are based on odds ratios.FindingsThe findings indicate that investor sophistication contributes to the annuity puzzle. Investors with low objective and high subjective investment knowledge (overconfident investors) are more likely to own annuities compared to those with low objective and low subjective investment knowledge. However, investors with high objective and low subjective investment knowledge (under-confident investors) are less likely to choose annuity ownership compared to those with low objective and low subjective investment knowledge. The findings and ensuing discussion highlight the importance of annuitization when planning for retirement, with implications for financial service professionals.Research limitations/implicationsThe measure of investor sophistication does not assess the difficulty level of each financial knowledge question. The questions used to construct the investor sophistication variable are based on general investment knowledge. In addition, the annuity ownership variable used in this study pertains to investments outside retirement accounts. Despite these limitations, the findings highlight the importance of annuitization when planning for retirement.Originality/valueUnlike prior studies, the authors consider four mutually exclusive measures of investor sophistication constructed from measures of objective and subjective investment knowledge to understand the effect of investor sophistication on annuity ownership in the United States.

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Section: Methodsmentioning

confidence: 99%

“…This question for measuring risk preferences was first asked in the Survey of Consumer Finances. We include risk preference because some studies have found that annuitization decreases with risk aversion (Bommier and Le Grand, 2014;d'Albis and Thibault, 2018;Pearson and Guillemette, 2020).…”

Section: Annuity Insurance Ownershipmentioning

confidence: 99%

The nexus between investor sophistication and annuity insurance ownership: evidence from FINRA's National Financial Capability Study

Korankye

Pearson

Salehi

2022

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“…This personality trait has been found to be associated with low risk‐taking behavior under uncertain conditions (Soane & Chmiel, 2005). In other words, individuals who score high on conscientiousness tend to have stable risk preferences and are less likely to take financial risks (Nicholson et al, 2005; Pan & Statman, 2013; Pearson & Guillemette, 2020; Soane & Chmiel, 2005). Moreover, conscientiousness is related to risk aversion, meaning that people who score higher on this trait tend to have lower risk tolerance (Durand et al, 2013).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Personality, financial risk‐taking attitude, and older individuals' stock investment decisions

Liu,

Del Asebedo,

Pearson

2023

Fin Plan Rev

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This study investigates the relationship between personality traits and older individuals' stock investment decisions using structural equation modeling. The results suggest that greater openness and extraversion are associated with a higher propensity to participate in stock investments and hold a larger proportion of stock investments relative to their other financial assets. Additionally, the findings suggest that those with greater conscientiousness and agreeableness are less likely to hold stock investments and tend to hold smaller proportions of stock investments relative to other financial assets. Last, the results indicate that those with greater openness and extraversion are more willing to take financial risks, whereas those with greater conscientiousness and agreeableness display less willingness to take financial risks.

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“…Kramer (2016) suggested financial literacy overconfidence is the result of having perceived high levels of financial knowledge with low levels of objective financial knowledge. Overconfidence in one's financial ability has been linked to financial behaviors such as carrying higher levels of debt (Cwynar et al, 2020), poor investment performance (Lewis, 2018), an inability to understand financial risk (Pearson and Guillemette, 2020) and failure to seek financial advice (Kramer, 2016;Porto and Xiao, 2016).…”

Section: Financial Literacy Overconfidence and Underconfidencementioning

confidence: 99%

“…Overconfidence in one's financial ability has been linked to financial behaviors such as carrying higher levels of debt (Cwynar et al. , 2020), poor investment performance (Lewis, 2018), an inability to understand financial risk (Pearson and Guillemette, 2020) and failure to seek financial advice (Kramer, 2016; Porto and Xiao, 2016).…”

Section: Introductionmentioning

confidence: 99%

The association between financial literacy confidence and financial satisfaction

Pearson

Korankye

2022

RBF

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PurposeThis study examines the association between financial literacy confidence and financial satisfaction. The authors posit that overconfident poor performers will experience greater levels of financial satisfaction and underconfident high performers will experience lower levels of financial satisfaction.Design/methodology/approachBased on the results of an objective financial literacy assessment and a subjective financial literacy assessment, variables measuring study participants' financial literacy overconfidence and financial literacy underconfidence are constructed. The variables are analyzed for their associations with financial satisfaction.FindingsThe results from the multivariate analysis suggest that financial literacy overconfidence (underconfidence) is associated positively (negatively) with higher levels of financial satisfaction and is associated negatively (positively) with lower levels of financial satisfaction.Practical implicationsThe discussion first highlights that to increase objective financial literacy, the disconnect between subjective financial literacy assessment and objective financial literacy must be recognized. Secondly, the discussion encourages financial literacy and education programs to incorporate behavioral education, which can provide learners with an awareness of the role of financial literacy confidence when making financial decisions.Originality/valueFinancial literacy overconfidence can result in an inability to recognize the realities of one's financial situation. Individuals who are overconfident in their level of financial literacy preformed lower on an objective assessment of their financial literacy, yet also tended to have a greater sense of financial satisfaction. This finding not only suggests that financial literacy overconfidence results in financial ineptitude, but also suggest that financial literacy overconfidence can result in specious conclusions regarding one's financial situation. The financial literacy underconfidence finding suggests that those who are financial literate, and who are also underconfident in their financial literacy, are less likely to have high financial satisfaction.

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The Association Between Retiree Migration and Retirement Satisfaction

Cited by 11 publications

References 22 publications

The nexus between investor sophistication and annuity insurance ownership: evidence from FINRA's National Financial Capability Study

The nexus between investor sophistication and annuity insurance ownership: evidence from FINRA's National Financial Capability Study

Personality, financial risk‐taking attitude, and older individuals' stock investment decisions

The association between financial literacy confidence and financial satisfaction

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