Certain Traits that May Lead to More Retirement Savings

According to a recent survey by Goldman Sachs Asset Management and Syntonig, a behavioral research team concluded people who wind up with more retirement savings tend to share four behavioral traits^.1

The study, Retirement Mindset Matters, surveyed 5,261 workers and retirees and revealed that individuals who find it easier to prepare for retirement typically exhibit these “optimal” behaviors: high optimism, high future orientation, high financial literacy and a preference for reward over risk.²

The results showed that only 10 percent had all four traits with 85 percent having a mix of the four. About 5 percent of respondents had none of the traits.

The Four Traits

1. OPTIMISM

Defined as the tendency to expect positive outcomes, optimism encourages proactive financial behaviors, like creating personalized financial plans and adapting investments in volatile markets.

According to the survey, respondents with high levels of optimism were more likely to report their retirement savings as on track or ahead of schedule (83 percent), compared to those with low optimism (41 percent). This positive outlook also correlates with lower financial stress.

2. FUTURE ORIENTATION

People who feel strongly connected to their future selves exhibit a high future orientation, which is akin to envisioning one’s life through a forward-looking lens.

The research found those with high future orientation are more likely to prioritize retirement planning and engage in prudent spending and savings habits. In fact, 70 percent with high future orientation have a personalized financial plan, compared to only 48 percent of those with low future orientation. Meanwhile, those less focused on the future are more likely to cash out retirement plans during job changes or dip into emergency savings.

3. REWARD FOCUS

The survey divided savers into two groups: reward and risk. Reward-focused individuals emphasize goal achievement and gains, while risk-focused ones prioritize security and protection. Reward-focused savers exhibit better retirement preparedness, with 56 percent having retirement savings over $200,000, compared to 38 percent of risk-focused savers.

4. FINANCIAL LITERACY

Understanding financial concepts like compound interest and inflation offers a clear benefit. Fifty-six percent of those with high financial literacy feel comfortable managing retirement savings, compared to just 51 percent of those with low literacy. Those more knowledgeable in finances tend to engage in better financial practices, including maintaining emergency funds and controlling spending.

To increase your financial literacy, contact one of our advisors. Engaging in your financial education will help you with your retirement preparedness.

1, https://www.kiplinger.com/retirement/these-traits-lead-to-more-retirement-savings
2. https://www.gsam.com/content/gsam/us/en/advisors/market-insights/gsam-insights/2023/retirement-mindset-behavioral-economics.html