The influence of attitudinal factors
and the financial crisis on interest in using
online retirement platforms
Master thesis for MSc in Business Administration - Marketing 14th of August 2013
by
The influence of attitudinal factors and the financial crisis on
interest in using online retirement platforms
Diederika Jongema
Faculty of Economics and Business MSc BA Specialization Marketing Management
Double Profile: Marketing Management and Marketing Research Course code: EBM867A20
Master Thesis 14th of August, 2013
Lycklemastraat 44, 8501 LV, Joure, The Netherlands diederika1@hotmail.com d.p.jongema@student.rug.nl s2039419 Supervisor Dr. J. van Doorn Second Supervisor Dr. J.C. Hoekstra Internship organization Mr. Redmer de Vries
Management Summary
In recent years, the economy has changed tremendously. Due to the crisis, many people are financially more vulnerable and have uncertainty regarding their future financial situation. This research is focused on individuals’ interest in a particular online retirement platform (Wijzser), which will give insight into their retirement, savings resources and habits. In this research, different attitudinal factors on consumer level are included: the customer involvement in long-term financial planning, consumers’ general perspective of the future and their consideration of future consequences of their consumer behavior. These factors and their relationship with interest in Wijzser are tested for significant moderation by individuals’ perceived affectedness by the current financial crisis. To be more specific: Do the above-mentioned attitudinal factors have an influence on the interest in Wijzser? Do the perceived effects of the financial crisis moderate this influence or relationship? To satisfy the main focus of the paper, this study starts with an investigation into literature and previous research on the factors involved in this study. This review indicated that individuals in general are not very interested or involved with financial planning or retirement itself. It was found in literature that the perspective towards the future in general by individuals can be separated into groups according to individual characteristics. The same fact applies to the consideration of future consequences of one’s consumer behavior. The literature review led to the following assumption: A high perception on the attitudinal factors mentioned above will lead to a (higher) interest in the online retirement platform. Other interesting assumptions were made regarding the influence of the financial crisis and its perceived effects on individuals. These can be found in the appropriate chapter.
This research used a questionnaire in order to accept or reject the hypotheses established as well as to find different groups or clusters to determine which individuals would be more interested in the online retirement platform. To be able to establish this, a latent class analysis was used and a multiple regression tested the hypotheses stated in the research.
Preface
This master thesis is written as the final paper of my master Business Administration, with specialization Marketing Management and Marketing Research (double profile). This thesis means the end of my student career and the door opening to my occupational career.
The topic that I have chosen for this thesis was negotiated with my internship company Friks, as it is one of their customer’s product that needs better targeting and positioning.
This topic is of very high interest in economy right now since a lot of speculation is occurring due to the financial crisis and all aspects that are influenced, such as retirement. This is something that interests me. Nevertheless, I wanted something different as a topic, instead of standard marketing subjects. The marketing subjects and influences are very present in this thesis but at first glance maybe hard to find.
I found the writing of this thesis an experience on itself. I found it educational, interesting and sometimes challenging. Obtaining information about the current financial crisis in Academic Journals was sometimes hard since mostly they were not very related to my topic. However, this does mean that this research has some new knowledge and information about the financial crisis and its influence on people.
Spreading the questionnaire was also quite challenging since more than 250 respondents were supposed to be gathered in a short period of time. Fortunately, I got help with spreading my questionnaire. Therefore I would like to thank my internship organization Friks, friends and family who helped me to get enough respondents. Also with pre-testing my questionnaire I could rely on my friends and family for their support.
I would like to thank all the people that participated with my research by filling in the questionnaire. Last but not least, I want to thank dr. Jenny van Doorn as my supervisor for her patients and feedback on my work. I would also like to thank dr. Janny Hoekstra as my second supervisor for her feedback and comments.
Diederika Jongema
Table of Content
1. INTRODUCTION ... 6
2. THEORETICAL FRAMEWORK ... 11
2.1RETIREMENT AND LONG-TERM FINANCIAL PLANNING ... 11
2.2GENERAL PERSPECTIVE TOWARDS THE FUTURE AND LONG-TERM FINANCIAL PLANNING ... 15
2.3CONSIDERATION OF FUTURE CONSEQUENCES OF CONSUMER BEHAVIOR ... 18
2.4PERCEIVED AFFECTEDNESS BY THE FINANCIAL CRISIS ... 21
2.5CONCEPTUAL MODEL ... 25
2.5.1 Dependent variable ... 26
2.5.2 Independent variables ... 26
2.5.2.1 Consumer involvement in long-term financial planning ...26
2.5.2.2 Consumer’s general perspective towards the future ...26
2.5.2.3 Consideration of future consequences of one’s consumer behavior ...27
2.5.3 Moderator... 28
2.5.4 Supporting the conceptual model ... 28
2.6HYPOTHESES ... 29
2.6.1 Retirement and long-term financial planning ... 29
2.6.2 Perspective towards the future and long-term financial planning ... 30
2.6.3 Consideration of future consequences of consumer behavior... 30
2.6.4 Perceived affectedness by the financial crisis ... 31
3. RESEARCH DESIGN ... 33
3.1RESEARCH METHOD ... 33
3.2RELIABILITY OF SCALES ... 34
3.3LINEAR REGRESSION ... 36
3.4LATENT CLASS ANALYSIS ... 36
4. RESULTS ... 37
4.1DESCRIPTIVE STATISTICS ... 37
4.2LINEAR REGRESSION ... 38
4.2.1 Regression assumptions ... 39
4.2.2 Overall fit of the regression ... 40
4.2.3 Regression equation ... 40
4.2.4 Hypothesis Testing ... 41
4.3LATENT CLASS ANALYSIS ... 44
4.3.1 Variable used in latent class analysis ... 44
4.3.2 Assessing Model Fit ... 44
4.3.2.1 Assessment on Information Criteria...44
4.3.2.2 Assessment on classification ...45
4.3.2.3 Assessment on classification and information criteria ...46
4.3.2.4 Bivariate residuals...46
4.3.3 Chosen latent class model ... 46
4.4DESCRIBING THE CLUSTERS ... 46
4.4.1 Cluster 1 - Affected youth ... 47
4.4.2 Cluster 2 - Involved and considerate individuals ... 48
4.4.3 Comparison of the clusters ... 48
5. DISCUSSION AND CONCLUSION ... 48
5.1GENERAL CONCLUSION OF LATENT CLASS ANALYSIS ... 48
5.2DISCUSSION ... 49
7. LIMITATIONS ... 53
7.1IMPRESSION OF DEPENDENT VARIABLE ... 53
7.2SAMPLE SIZE ... 53
7.3FUTURE RESEARCH ... 53
REFERENCES ... 54
APPENDICES ... 65
APPENDIX I-QUESTIONNAIRE ... 65
APPENDIX II-LINEAR REGRESSION ... 71
1. Introduction
Large-scale research and surveys done in several countries as the UK, New Zealand, Ireland, USA and the Netherlands, concerning financial capability and managing money, have shown that there are significant differences in financial behavior per individual or household. It has been found that the typical individual or household does not manage finances very well (Van Rooij, Lusardi & Alessie, 2011; Atkinson, McKay, Kempson & Collard, 2006). Research by van Rooij, Lusardi and Alessie (2011) found that most households do not have a lot of knowledge regarding fundamental financial perceptions. Individuals tend to be very short-sighted when making financial decisions and are possibly ill-prepared for retirement.
Retirement can be described as a fee that will be paid to the individual after he or she discontinues working. This fee is paid monthly by the pension fund or other resources of the individual (Van Rooij, Lusardi & Alessie, 2011).
The Netherlands is a well-organized country where many issues are handled for citizens under law in the social system (Van Els et al., 2007). This is very fortunate for employees, since most of their retirement issues will be arranged for them. For some individuals as well as households, who from here on will be referred to as individuals, it is necessary to save for their retirement during their working years. However, it has been shown that reality is different. Dutch citizens do not tend to save as much as they should and are not very knowledgeable regarding retirement. In the Netherlands, 69% of the population is “retirement unaware” (AFM, 2012). This means that most of the population is not aware of what their income will be when they retire. These individuals are, at the moment, not concerned with their retirement and do not have anything consciously arranged regarding their retirement. A remarkable 20% of the population does not even know if there actually is a retirement build up at the moment or not. This part of the population is “completely retirement unaware” (AFM, 2012). The lack of knowledge and interest is especially a matter of concern for retirement policymakers in the Netherlands and other countries (Van Rooij, Lusardi & Alessie, 2011). Individuals are today more expected to take more responsibility and precautions for retirement and financial security. In the Netherlands, many individuals hold overly optimistic expectations about their level of retirement benefits. This finding has encouraged a thorough debate in the Netherlands on policy measures needed to close this expectation gap (AFM, 2009; Van Rooij, Lusardi & Alessie, 2011). The government has argued that the official pension age needs to be increased from 65 to 67 (Van Rooij, Lusardi & Alessie, 2011).
their retirement fully, or even partially. Most individuals are not saving enough for a comfortable retirement (Kelly & Gong, 2010). This problem of unawareness and unconsciousness seems not only common in the Netherlands but in other countries. Individuals have no insight into what their future is going to look like financially; there is no awareness or interest in how they are going to enjoy their retirement.
In addition to the unawareness and disinterest of the individuals, the global economic situation of these days is less than prosperous. In short, the world is experiencing “bad financial weather”, recovering from many events and much turbulence in the economic environment in many countries. The reason for this is the financial crisis in numerous parts of the world (Wilkinson, Spong & Christensson, 2010; Singala & Kumar, 2012). Due to these events, consumer behavior and business are impacted. Plans for private life, career and business might not proceed as first foreseen. For this reason, many individuals are in financially uncertain times due to, for example, unemployment. This has an effect on individuals’ everyday lives and their futures.
In business, the financial crisis also has a lot of influence. For some companies, there might be a possibility that they will not endure the competition in the market (Singala & Kumar, 2012). The financial crisis in the USA and UK also affected the Dutch financial system in a similar way (also the retirement funds) with just a short time lag (Wilkinson, Spong & Christensson, 2010). The financial crisis had an effect on many markets, companies and society itself.
Due to the financial crisis and its effects, consumers are showing different consumer behavior. The individuals’ perspective of the future (Lang & Carstensen, 2002; Williams & Martinez, 2012; Yeung, Fung & Lang, 2007; Zimbardo & Boyd, 1999) and their consideration of future consequences of one’s current consumer behavior (Strathman et al., 1994) might be influenced by the financial crisis in several ways. The effect of the financial crisis might make individuals more careful and conscious of their financial wellbeing, or they might be more pessimistic due to the crisis and not feel the need to consider any long-term financial planning (Katona, 1975; Jin, Pang & Cameron, 2007; Turner & Avison, 1992; Loewenstein, 1996, 2000).
of products in days of crisis? What plays an important role in their decision and behavior to use these products? Which groups of people are more interested in this platform?
The objective of this paper is to analyze several attitudinal factors on the consumer level: the customer involvement in long-term financial planning, consumers’ general perspective of the future and their consideration of future consequences of their consumer behavior. These factors are tested on their degree of interest in using online retirement platforms. One moderating effect is taken into account in testing the attitudinal factors, the perceived affectedness by the financial crisis.
The reason why these variables were chosen is that the combination of these variables was expected to give new insights. Most of the variables have been studied separately in different research, by different authors, but never in combination with the other variables. In order to study “to what degree” and “who” is interested in online retirement platforms, these variables were chosen.
The variable “customer involvement in long-term financial planning” indicates the involvement of individuals in financial planning in general, which also involves retirement planning. Literature of researchers as Ellen, Wiener & Fitzgerald (2012), Gollwitzer (1999; 1997) and Van Rooij, Lusardi & Alessie (2011) already set the foundation for this variable. In their studies they found support regarding why individuals are not necessarily interested in long-term financial planning and which predictors there are concerning financial planning (Ellen, Wiener & Fitzgerald, 2012), which behavior will insure a proper financial planning (Gollwitzer, 1997; 1999) and the suggestion that the more time is spent on thinking about retirement the more effect this has on their actual planning. With the foundation of previous research, it is expected that this variable will indicate the probability of individuals’ interest in online retirement platforms in this context.
“Consumers’ general perspective of the future” was chosen to give an indication of how people view their future in general, with the expectation that the more positive their perspective of the future, the higher their interest will be in online retirement platforms. Zimbardo and Boyd (1999) have provided a base for this variable since they concluded that individuals with a positive perspective are striving for goals and rewards, which also includes retirement planning. There are mainly two concepts of future time perspective concluded by Lang and Carstensen, 2002; Williams and Martinez, 2012 and Yeung, Fung and Lang, 2007.
individuals concerning the above-mentioned variables. Previous research found that individuals can respond in different ways to the crisis (Jin, Pang and Cameron, 2007). The more pessimistic individuals are the more they tend to save (Katona, 1974, Marshall et al. 1992).
This study has a scientific value for the body of literature because it sheds new light on the role of financial crisis on interest in retirement products by individuals, and influential factors involved. There have been many studies in the field of retirement (for example, Ellen, Wiener & Fitzgerald, 2012; Hornstein & Wapner, 1985; Lusardi, 2003; Lusardi & Mitchell, 2006; Van Els, van den End & van Rooij, 2004; van Rooij et al., 2004), which generally all showed that retirement is not a very conscious part of individuals’ lives. This study covers different and new dimensions in the area of retirement and long-term financial planning, which will add value to the literature and indicate what the effect and relationship is of all the factors involved. Nenkov, Inman and Hulland (2008) suggested that there should be more research done in areas of future long-term planning. This research is in a way a response to that.
Since it is a new product, new findings are desired that will be of value to existing (marketing) literature and future research on (online) retirement planning products. The view of individuals’ on their current expenditures and their perspective of the future regarding their retirement issues will be of additional value to literature due to the unique context of this study. This study will open doors for future research and act as a fundamental study for further research on online products within the segment of retirement or retirement issues involving financial crisis in the Netherlands.
In addition to scientific contribution, the topic of this paper is interesting because no research has been done in this particular section of the market, regarding online retirement platforms in the Netherlands with the above-mentioned factors. Especially given that perceived affectedness of the crisis is taken into account, this has not been studied before in this context, as this will be indicated in the next chapter (Jin, Pang & Cameron, 2007; Debab & Yateem, 2002; Erikson, 1959; Turner & Avison, 1992). Since the Dutch economy is still in the middle of the crisis, this is interesting for companies who sell these platforms or who are in similar businesses. They can use this study as a guideline for adjusting to the market. The effects of several factors will be displayed and will give organizations a target group for positioning and promoting, since their interest in retirement platforms is higher.
The main research question is the following:
Is the degree of interest in usage of online retirement platforms influenceable by factors regarding customer involvement in long-term financial planning, the consumer’s general perspective of the future and the consumer’s consideration of future consequences of consumer behavior, and is there a degree of moderation measureable concerning perceived affectedness by the financial crisis?
Below, the sub-questions of this study are presented; these are based on the main research question and the main subject of the study.
The sub-questions of this study are the following:
To what degree has “consumer involvement in long-term financial planning” a positive effect on “interest in using online retirement platforms”?
To what degree has “the general perspective of the consumer towards the future” a positive effect on “interest in usage of online retirement platforms”?
To what degree has “consideration of future consequences of one’s consumer behavior” a positive effect on the “interest of using online retirement platforms”?
To what degree has “the perceived affectedness (of respondents) by the financial crisis” a strengthening influence on the relationship between the “involvement in long-term financial planning” and the “interest in usage of online retirement platforms”?
To what degree has the “perceived affectedness by the financial crisis” a weakening influence on the relationship between the “consumers’ general perspective towards the future” and the “interest in usage of online retirement platforms”?
To what degree has the “perceived affectedness by the financial crisis” have a strengthening influence on the relationship between the “consideration of future consequences of one’s consumer behavior” and the “interest in usage of online retirement platforms”?
Since the plan was to form latent groups that will separate the more-interested group(s) of individuals from the less-interested group(s) of individuals, a method of analysis had to be chosen that is capable of doing this efficiently. By using latent class analysis, latent classes can be determined that explain the associations observed among the tested variables (Bassi, 2011).
Reading Guide
2. Theoretical Framework
2.1 Retirement and long-term financial planning
Retirement programs date back to the 19th century, their importance has only been significantly known since the 1950s (Williams, 1965). It is quite a prominent finding when such an old development is only seen for its full benefit after slightly more than half a century. This also shows that individuals were hardly concerned about their retirement, even a century ago. According to Williams (1965), there seemed to be no general response to retirement benefits of individuals when analyzed in terms of tendencies to consume. This means that there is no consistent manner in how individuals react to the benefits of retirement. Since the study of Williams (1965), made many decades ago, this might have changed, and other research has been done which may give more recent insights, which will also be taken into account. In addition to the finding of Williams (1965), the savings of individuals, which also include retirement savings, have been declining for over two decades. In the 1980s individuals in the USA saved about 9% of their income; in the 1990s around 5%, and in the new century almost 0%. According to Ellen, Wiener and Fitzgerald (2012), the reason for this lack of saving for retirement is the self-denial of realizing that saving for retirement is necessary, and individuals value future consumption less than current consumption. Next to being short sighted about the future, having a weak will and being a slave to trends makes individuals save less than they should (Ellen, Wiener & Fitzgerald, 2012; Bodie, Prast & Snippe, 2008). In addition, their personal involvement in saving is very low (Zaichkowsky, 1985).
Retirements are seen as much slower evolving products than the general financial services industry. Retirements are mostly unable to deal with the institutional cost of change, are slow to adapt or innovate, and tend to rely on past practices despite the uncertainties in financial markets (Clark & Urwin, 2010).
Some individuals experience retirement as an abrupt switch of being employed and having a role to having no role to fulfill. It has been shown that this is a complex transition for some individuals (Pinquart & Schindler, 2007; Wang, 2007). Therefore, there are individuals who experience the feeling of retirement coming closer as frustrating and choose not to take any prior action or preplanning. Because of this, job satisfaction is the best predictor of retirement planning, in a negative sense according to the findings of Topa et al., (2009). When an individual is satisfied with his or her job, the individual will be less likely to take significant action regarding retirement planning (Topa et al., 2009).
retirement is a time to relax and slow down into a quieter life and prepare for aging; (2) New Beginning: retirement is the welcome beginning of a new phase of life, a time of freedom and liberation; (3) Continuity: retirement is not a major event or change in their life; (4) Imposed Disruption: because their occupation is irreplaceable, retirement is meaningless and frustrating. Although these findings are supported by other researchers (Gee & Baillie, 1999), this does not imply that these are the only dimensions of retirement expectation. The dominant expectation, for both men and women, was that retirement would be a “new beginning” (Hornstein & Wapner, 1985). This is in contrast with the findings of Hanson and Wapner (1994), as they found that among retired women the most common experience was “continuity”. They did find that “new beginning” was the most common category of experience for men.
As mentioned previously, many studies document a lack of retirement planning, even among individuals close to retirement (Lusardi, 2003; Lusardi & Mitchell, 2006, 2007). Those who prepare for retirement tend to feel much more comfortable with how their retirement actually turns out (Lusardi, 2003). In particular, many individuals in the Netherlands show not only a lack of knowledge about their retirement but also a major lack of interest in retirement issues. This might be the result of the compulsory participation in company retirement plans, where most of the issues were arranged for the individuals (Van Els, van den End, & van Rooij, 2004; Van Rooij et al., 2007).
It is shown by Gollwitzer’s (1999) psychological research that concrete plans with specific steps are very powerful in increasing self-discipline in retirement saving. Gollwitzer’s (1999) experiments demonstrated that the development of concrete plans allows individuals to translate saving intentions into actions. Gollwitzer and Brandstätter’s research of 1997 also verifies this. This leads to a greater likelihood of achieving stated goals. Actual saving behavior is also strongly correlated to time spent thinking about retirement (Van Rooij, Lusardi & Alessie, 2011). According to Ellen, Wiener and Fitzgerald (2012), income is a predictor for saving for retirement. Age and presence of dependent children are not predictors for saving for retirement. Therefore, the involvement in long-term financial planning of certain individuals is not stable and no standard conclusions can be drawn. The degree of involvement depends on several personal and environmental factors and the current situation of the individual.
respondents interviewed are “very confident” about having enough savings for retirement. This is a very low percentage, considering the number of people who were studied and as a reflection of the population. Approximately 40% of employees in their fifties reported that they did not think about their retirement that much or did not make a plan for it. At this age this is quite remarkable, since their retirement is only a little more than decade away. This shows that individuals are hardly concerned with their retirement and what their income will be during retirement.
Moreover, it is still not clear how individuals choose retirement products, whether these individuals make decisions influenced by the outcomes of the product or the product itself (Goldstein, Johnson & Sharpe, 2008). However, research has found that a person is more likely to select a saving instrument that delivers a short-term reward than one that does not (Thaler, 1994). However, according to Ajzen’s (1991) theory of planned behavior, an individual’s behavior in retirement planning is determined by three concepts, which include: attitude towards the behavior, subjective norms and perceived behavioral control.
People often think that retirement payment is the same for both genders; however, depending on their occupation and savings, this is wrong. There is a difference in retirement for men and women, according to Dutch sources. The number of women older than 65 years with a complementary retirement in the Netherlands (aanvullendpensioen) has increased in the last decade. However, the difference between men and women is still large. Women received on average less than the half of their complementary retirement in comparison to men (webmagazine, 2012). Additionally, international research also found that women do get paid less than men.
Table 1: Findings Gough and Sozou (2005) Relatively younger or older Gender Educational Level Member company pension schemes
Income Set aside money Wish for early retirement Care about survivors benefits/pension’s consequences of changing jobs
Young Mixed biased towards female
Low Low Middle range (£20,000-£29,999).
Yes No No/no
Old Mixed biased towards males Moderate education level (A level) High Slightly higher than moderate income - Yes High/high
Young Female Moderate education level (A level)
High Less than moderate (less than £20,000)
Yes Yes -
Older (51+) Mixed highest (Degree level)
High(est) Higher (more than £40,000)
No Yes High/high
Young More female High Low Lower - - No/high
Young More male High Low(est) Middle range (£20,000-£29,999).
- No No/high
The main conclusion of Gough and Sozou (2005) was that classifying individuals simply according to their gross level of savings does miss out on important structures or patterns. Their behavior can be quite diverse. Individuals who are in company pension schemes do not necessarily have to set aside money, but some of them do (but too little). However, the findings of Gough and Sozou (2005) suggested that educational level is not a true predictor for motivation of retirement planning; there are studies that conclude that it is some sort of stimulant for motivation. For instance, the study of McPherson and Guppy (1979) found that the educational level of the individual predicts the thinking and talking about retirement and saving. The research of Ellen, Wiener and Fitzgerald (2012) found that formal education is positively related to saving for the future. Health is a factor that influences decision making in retirement, as well as wealth (Adams & Beehr, 2003). When an individual’s health is not good, this person will have a different attitude towards long-term financial planning than someone who is healthy. When an individual has the perception that they might not live long enough to have a retirement, their attitude towards retirement and long-term financial planning is less interested.
Summary of previous studies in ‘retirement and long-term financial planning’
A table is generated to summarize the found literature to give an overview of what the previous studies have shown. The table can be found below (Table 2).
Table 2: Summary of findings regarding ‘retirement and long-term financial planning’.
Literature Findings
Retirement and long-term financial planning
Williams (1965) No general manner in which a individual might react on retirement benefits. 72% of people >73 years have a lower income than $2500 after retirement. Individuals do not save enough money.
Ellen, Wiener and Fitzgerald (2012) Bodie, Prast & Snippe (2008) Lusardi (2003)
Lusardi & Mitchell (2006, 2007)
Individuals saving are declining.
1980’s 9% of their income, 1990’s 5% and in the new century almost 0%. Individuals are more concerned with current spending than future savings. Denial for retirement saving and shortsightedness is present.
Lack of retirement planning also present for individuals close to retirement. Lusardi (2003) Those who do prepare for retirement are more comfortable when retirement
comes. Pinquart & Schindler (2007); Wang
(2007)
Some individuals see retirement as an abrupt switch of role and are therefore not comfortable with the thought of going on retirement. These individuals do not perform any preplanning or prior action.
Topa et al. (2009) Job satisfaction is the best predictor for retirement planning, in negative sense. Hornstein and Wapner (1985) Retirement can be seen by individuals as one of the four modes:
These are 1) Transition to Old Age/Rest; 2) New Beginning; 3) Continuity; 4) Imposed Disruption.
Gollwitzer (1999)
Van Rooij, Lusardi, Alessie (2011)
Experiments demonstrate that the development of concrete plans allow individuals to translate saving intentions into actions.
Actual saving behavior is also strongly correlated to time spent thinking about retirement.
Kennedy and Matwijiw (2010) Individuals do not have sufficient information or expertise to plan adequately for their retirement funds.
Ellen, Wiener and Fitzgerald (2012) McPherson and Guppy (1979)
Formal education is positively related to future retirement savings. Income is a predictor for saving for retirement. Age and presents of depending children are no predictor for saving for retirement.
Yang & Devaney (2011) Only 13% of working respondents are ‘very confident’ about having enough money for retirement. Approximately 40% of the employees who are in their fifties reported that they did not think about their retirement that much or did not make a plan for it.
Goldstein, Johnson and Sharpe (2008) It is not clear how individuals choose their retirement. If they look at the outcome or the product itself.
Thaler (1994) A person is more likely to select a saving instrument that delivers a short-term reward than one who does not.
Ajzen’s (1991) Retirement planning is determined by three concepts which are attitude towards the behavior, subjective norms and perceives behavioral control.
Gough and Sozou (2005) There is no real forecasting to make on who individuals might plan their retirement based in the characteristics taken into account.
Adams & Beehr (2003) Wealth and health are factors that influence decision making in retirement.
2.2 General perspective towards the future and long-term financial
planning
the length of the future time span over which an individual conceptualizes personal future actions (Wallace, 1956).
Individuals with a “deep future time perspective” assume themselves to have quite some time in a particular role in their life. Individuals with a “shallow future time perspective” are likely to view their time to be short and limited, or the dissolution of that role to be rapid. The type of time perspective of an individual is shown to have a different impact on the structure development of the individual’s decision making (Lang & Carstensen, 2002; Williams & Martinez, 2012; Yeung, Fung & Lang, 2007). The behavior of individuals with a deep future time perspective is controlled by striving for future goals and rewards (Zimbardo & Boyd, 1999). This is the better perspective, comparing the two, considering it is more future oriented which gives these individuals more certainty. A future-oriented individuals’ decisions are influenced mainly by representations of future consequences. These individuals are concerned about responsibility, liability, gains and losses and prefer consistency (Strathman et al., 1994). Additionally, positive future-oriented individuals take a more sensible approach to weighing positive and negative outcomes in the understanding process (Van Ittersum, 2011).
According to Treadway et al. (2011), future time perspective is an essential element of socioemotional selectivity theory. Socioemotional selectivity theory assumes that social interaction is key to well-being. Individuals’ satisfaction with social relations is dictated by their future time perspective (Carstensen, 1992, 1995). According to Carstensen (1995) and Treadway et al. (2011), socioemotional selectivity theory focuses on the motivational consequences of a shifting “temporal horizon”, and assumes that individuals will select goals in harmony with their perceptions of the future as being “limited” or “open-ended”. Some individuals will recognize time as open-ended and will therefore be especially motivated by growth or knowledge-related goals that may be useful in the more distant future. Other individuals recognize time as limited, and will be more motivated by short-term emotional goals, such as investing in existing relationships to assure durability for the time being. Socioemotional selectivity theory has received empirical support in many experimental studies (Lang & Carstensen, 2002). As an individual changes his or her future time perspective, the person will invest energy and resources towards the either instrumental or emotional outcome.
who planned to continue to work for a longer period of time. This specific group of individuals were less likely to be involved in retirement planning behavior because of their mindset to work longer. Additionally, other studies reveal that the concept of future time perspective has a role in explaining retirement planning behavior (Hershey et al. 2007; Hershey & Mowen 2000; Jacobs-Lawson & Hershey 2005). Future time perspective is seen by some researchers as a central personality trait (Mowen & Spears, 1999); other studies suggest that future time perceptive is flexible, and therefore has the capability to change over time (Zacher & Frese, 2009). This can be altered by influences of the personal or social environment. There are some studies that indicate that future perspective predicts the tendency to plan and save. Among individuals aged 35 to 88, future time perspective is positively associated with self-reported financial preparedness for retirement (Jacobs-Lawson & Hershey, 2005). The higher the future time perspective, the more these individuals plan and save.
Summary of previous studies in ‘perspective towards the future and long-term financial planning’
Based on literature and the above mentioned previous findings, there are mainly two different types of perspectives which has its influence on long-term financial planning.
Below a summary of the studied literature is given in Table 3 to give a quick overview of what is found.
Table 3: Summary of findings regarding ‘perspective towards the future and long-term financial planning’
Literature Findings
Perspective towards the future and long-term financial planning
Lewin (1951) Future time perspective is defined as the totality of the individual’s view of his/her psychological future and psychological past existing at a given time. Lang & Carstensen, (2002); Williams
and Martinez, 2012; Yeung, Fung & Lang, (2007)
There are two main concepts of future time perspectives which are “deep future time perspective” and “shallow future time perspective”. The type of time perspective of an individual is shown to have a different impact on the structure development of the individual’s decision making in long-term or retirement planning.
Strathman et al. (1994) A future oriented individuals decision are influence mainly by representation of future consequences.
Treadway et al. (2011) Carstensen (1992; 1995)
Future time perspective is an essential element of Socioemotional Selectivity Theory. Socioemotional selectivity theory assumes that social interaction is the key to well-being and individuals’ satisfaction with their social relations is dictated by their future time perspective.
Hershey et al. (2007),
Hershey and Mowen (2000), Jacobs-Lawson and Hershey (2005), Yang & Devaney (2011)
According to several studies the concept of future time perspective has a role in explaining retirement planning behavior. Retirement planning is positively influenced by not only positive future time perspective but also two psychological factors. These factors are the intrinsic rewards of work and a perspective on the economy in the future, which might be closely linked to retirement planning behavior.
Zacher and Frese (2009) Recent studies suggest that future time perceptive is more flexible and therefore could change over time.
2.3 Consideration of Future Consequences of Consumer Behavior
Consideration of future consequences of consumer behavior can be defined as the thoughtfulness of one’s (consumer) behavior and/or expenditures, and the resulting consequences this might have for the future. It involves a struggle between present behavior with one set of instant consequences and one set of future consequences (Strathman et al., 1994). The difference between “consideration of future consequences of consumer behavior” and “perspective towards the future” and “long-term financial planning” is that the perspective towards the future is more related to the individuals’ perspective in general towards the future, having more to do with how they view the future from their own perspective of their current situation (Strathman et al., 1994).Consideration of future consequences of consumer behavior is related to the expenditure of an individual and whether the individual realized the impact of their current behavior in consideration of the future and how their situation will be then, due to their spending. Therefore “consideration of future consequences of consumer behavior” has cohesion with retirement planning due to the fact that retirement is associated with own (current) savings and (current) expenditures, as well as the consideration of saving or not saving for retirement and its consequences.
Individuals who have a low consideration of future consequences are expected to focus more on their present needs and concerns instead of distant. It is expected that these individuals act to satisfy present needs. Some individuals may not even consider future consequences of their own behavior. Individuals who have high consideration of future consequences are expected to consider future consequences of their own behavior and are expected to use distant goals as guidelines for their present actions. In extreme cases, some individuals may not even consider current consequences at all (Strathman et al., 1994).
over time and rely on perspectives of behavior. Also similar to knowledge, the height of the importance associated with the issue has influence. This also has a resistance to social influence, as in individuals not caring for social acceptance of their attitude or behavior (Borgida & Howard-Pitney, 1983). Additionally, it is found that individuals with low consideration of the future are perhaps less able or willing to think about future outcomes than individuals with high consideration of future consequences are (Strathman et al., 1994).
Over the decades, some research has used different measures and questionnaires to measure time orientation (Strathman et al., 1994). Stewart (1976) developed the Stewart Personality Inventory (SPI), which includes several scales, and one intended to measure future orientation. Items on the “future orientation” subscale included “planning the future” and “thinking about distant goals.” Unfortunately, later, in a different study, Stewart and Ahmed (1984) concluded that none of the items could be considered future orientation validly. Sanders (1986) developed questions designed to measure subjective time experience. The “future orientation factor” was, among others, identified. However, no reliability or validity of the questions was found (Strathman et al., 1994; Sanders, 1986). Therefore, the need to develop new measurement items for consideration of future consequences was indentified.
When an individual has a low consideration of the future and consumer behavior is too high or too much, one can get into debt. This causes the incapability to save for retirement (Strathman et al., 1994). An explanation of debt by Lea et al. (1995) is that individuals get into financial difficulties through treating certain products that only display social characteristics, as necessary goods. Other aspects are the goals the individuals make concerning money savings and spending. Some individuals have a greater feeling of responsibility and think their decisions over before taking action. The influence of expectancy of a goal is important for the consideration of future consequences (Lea et al., 1995). This has significant impacts on retirement planning. Next to the explanation of debt by Lea et al. (1995) also unforeseen events can happen which are hard to prevent but also cause debt. Examples of these are natural disaster, high medical bills due to illness, premature death and so on. However, these examples are not applicable for this research.
In everyday life, people have to spend daily to be able to survive. For some individuals it is hard to save in addition to daily expenses; a reason for this is lack of money but also other more personal characteristics can influence this. An example of this is self-regulation. According to Carver and Scheier (1998) self-regulation refers to the process by which individuals instigate, adjust, or dismiss actions to promote accomplishment of personal goals or standards. There are three important components to the process of self-regulation: (1) clear standard of how things are supposed to be; (2) comparing the actual state to a desired state (defined through previous standards); and (3) intervening response to bring change when the current state is lacking in comparison to the desired state (Carver & Scheier 1998). Self-regulation is seen as a complex, multifaceted process, and as a personality characteristic (Mischel et al., 1996). Other issues interrelated to self-regulation are motivation (Bandura 1997: Gollwitzer, 1990), social and cognitive psychology (Baumeister et al. 1994; Baumeister, 2002) and consumer research (Hoch & Loewenstein 1991). Consideration of the potential outcomes of behavior not only makes individuals more conscious of their own position, but also provides them with information as to whether an action has the ability to bring them towards a desired end state (Nenkov, Inman & Hulland, 2008).
Effective self-regulation involves seeing a situation in terms of future concerns, values, and goals (Carver & Scheier 1981). Effective self-regulation forces an individual to be able to exceed the present situation by consideration of future consequences. When the goal is weak and attention is bound to current events, the threat of self-regulation failure is larger (Baumeister & Heatherton, 1996, Gollwitzer, 1997, Scheier et al., 1994).
negative outcomes. Nenkov and colleagues also indicated that there is room for more investigation in this area, also regarding long-term planning.
The outcome of consideration of the future has been conceptualized as numerous different kinds of expectancy judgments: (1) self-efficacy expectations (whether an individual is capable of achieving the desired outcome; Bandura, 1997); (2) outcome expectancies (the probability of performing a certain behavior will lead to the desired outcome; Bandura, 1997; Carver & Scheier, 1998); (3) or general expectations (perspective of whether the future in general will be positive or negative; Scheier, Carver & Bridges, 1994). These three judgments form the consideration of the future, whether consideration of the future will fail or not (Nenkov, Inman & Hulland, 2008). Therefore, the individuals’ evaluation of the likelihood and importance of the consequences is very essential in deciding the best thing to do. A single (saving) goal, instead multiple, led to higher implementation intentions, which in turn resulted in stronger intentions to save (Gollwitzer, 1999; Gollwitzer & Brandstätter, 1997; Soman & Zhao, 2011). Three of the most common goals for saving are children’s education, health care needs, and saving for retirement (Soman & Zhao, 2011). Many individuals who plan to save or consider saving more, are unable to do so. This makes them individuals considerate of the future but unable to do so (Thaler & Bernartzi, 2004). It is known that good intentions are not always translated into actions and thus can easily lead to the failure of goal achievement (Baumeister, 2002; Gollwitzer, 1999).
According to Ellen, Wiener and Fitzgerald (2012) the reason for the lack of saving is the self-denial of realizing that saving is necessary and individuals value future consumption less than current consumption. This points out the individuals generally do not consider their actions with future consequences and are low in their consideration of future consequences (Strathman et al. 1994). People fail to adopt positive behaviors to obtain their goals because of shortsightedness, self-control problems, perceptual errors, distributed decisions and being a victim to trends makes individuals save less than they should (Ainslie & Haslam, 1992; Baumeister, 2002; Elster, 1979; Herrnstein & Prelec, 1991; Schelling, 1984; Ellen, Wiener & Fitzgerald, 2012; Bodie, Prast & Snippe, 2008).
Regardless of not saving frequently for retirement, individuals have short-term savings goals and expecting to be relatively dependent on a government pension. This is evidence to suggest people are optimistic that their retirement income will be sufficient to prevent a fall in living standards (Cobb-Clark & Stillman, 2009).
2.4
Perceived affectedness by the financial crisis
guide the interpretation of a crisis and are shaping certain attitudes (Jin, Pang & Cameron, 2007). People are scared, frightened of what might come and do not know what to expect. Therefore people might be more careful and risk avoiding. Some individuals are less affected by the financial crisis and see the crisis as a chance, for instance to undertake action that no one else dares to make (Jin, Pang & Cameron, 2007). In example selling and buying houses or starting up new businesses.
Even though there is not much literature available about this specific matter, regarding individuals feeling the effect of the financial crisis upon themselves in their behavior and financial freedom, there is much knowledge to gain from this specific study. Previous literature is mainly focused from an organizational perspective as how the crisis influences and effects the consumers perspective towards the company and/or product (Jin, Pang & Cameron, 2007; Debab & Yateem, 2012). However, this still can be used to study the perceived affectedness by the financial crisis of individuals since emotions and attitudes of the individual is still a large aspect of this subject. The emotion and attitude of the individual forms the perceived affectedness by the financial crisis (Jin, Pang & Cameron, 2007). An individual’s theory about the economy influences their saving behavior. The more pessimistic they are, the more likely they are to save for retirement (Katona, 1975, Marshall et al., 1992).
Among other effects of the financial crisis, younger adults suffered unexpected increases in unemployment and declines in salary employment as found in research on the period between 2008 and 2012 during the financial crisis (Chowdhury, Islam & Lee, 2013; Cho & Newhouse, 2013; Hoynes, Miller & Schaller, 2012). Due to the crisis men seemed to lose their occupation more often in comparison to women. This is mainly due to the higher original employment rates per specific segment (Cho & Newhouse, 2013). For instance more men were employed at banks, since the crisis effects the majority of banks, a lot of men became unemployed. Research by Cho and Newhouse (2013) showed that traditionally more disadvantaged groups, for example less educated and female workers, were not necessarily more affected by the crisis is case of unemployment or salary declines. Additionally, the effect of the financial crisis on the labor market has not been uniform across demographic groups. Men, Blacks, Hispanics, young adults, and those with lower education level have experienced more employment declines and unemployment increases compared to other demographic groups. These groups are women, Whites, prime-aged workers and those with high educations levels as proven in research by Hoynes, Miller and Schaller (2012).
Surprisingly, in most developed countries, the long-term unemployment rates of young adults exceeded those of (older) adults (Chowdhury, Islam & Lee, 2013).
According to some researchers the degree of which an individual is affected by the crisis is depending on their “vulnerability” (Erikson, 1959) or better said their “openness” to both harm and enhancement due to the crisis (Turner & Avison, 1992; Scheier et al., 1994). The more vulnerable they are and the more open to harm the more affected they perceive themselves to be (Turner & Avison, 1992). Previous research suggest that there is a difference in vulnerability regarding gender and social class when it comes to handling stressful events due to crisis (Kessler, 1979; Kessler & McLeod, 1984; Turner & Avison 1989). Men seem to be less vulnerable to crisis than women. Individuals in lower social classes also seem to be less capable of solving their stressful feelings towards crisis and are more vulnerable than higher social classes (Turner & Avison, 1992).
The majority of assumptions concerning the vulnerability of different groups are based on three mechanisms: uneven exposure to the effect across sectors (i.e. more males than females in a sector), firms employment decisions (decisions of the firm itself), and households labor supply decisions in response to the crisis (individuals make their own decisions) (Cho & Newhouse, 2013).
Another effect of the financial crisis, most unemployed youth, self-employment failed to provide a sufficient buffer to compensate for less salary occupations. Due to that, many youth workers chose to exit the labor force (Cho & Newhouse, 2013).
Not only does the crisis have effect on the individuals’ current situation, but also the family’s future situation. The crisis forces parents to make the hard choice between groceries, education and other household needs. Children and youth from poor families often see their already poor educational opportunities disappear (Chowdhury, Islam & Lee, 2013). According to a long-term study by Paul and Moser (2009), the number of individuals with psychological troubles who are unemployed was found to be 34 percent in comparison with the 16 percent among employed individuals. The number of short-time workers increased considerably to more than 1.5 million in May 2009. It is concluded by research that without the extensive use of short-time work, unemployment would have risen twice as much as it actually did in 2009 (Chowdhury, Islam & Lee, 2013).
processes that are mostly understood to underlie decision-making. These visceral factors have been seen through history as an unreliable and unpredictable influence on behavior. However reality seems to proof different. Feelings of individuals fluctuate often rapidly, which makes it occasionally hard to capture and understand feelings and through that behavior of individuals. The changeability of feelings should not be confused with unpredictability. Visceral factor and their influence on individual behavior are highly systematic, whereas cognitive thoughts, which are commonly seen as the source of stability in behavior, are a major source of unpredictability. Visceral factors are temporary, however the behaviors they produce have long-lasting and important consequences. This not only for the individuals themselves, but also on society. Partly because visceral influences cause people to take (extreme) actions, and partly since important decisions induce powerful emotions in decision-makers, many of life’s most important decision are made under the influence of intense visceral states (Loewenstein, 2000). When people are unemployed due to the financial crisis they might not save any more for the future or retirement. When this unemployed is long lasting, this might end up in severe lack of savings or even depth which will adverse for the individual.
Loewenstein (1996) found that visceral factors influence all domains of behavior, the author found three general categories of behavior are of special relevance to economics and therefore crisis. The first category is the “individual’s bargaining behavior” this is strongly colored by emotions such as anger, fear, and embarrassment. Financial crisis and its influence on society creates these emotions. Individuals might feel they have a lot bargaining power (when buying a car) or might feel that they are not in a position with a lot of bargaining power (i.e. asking for a raise at work). The second category is the visceral factors playing a critical role in “intertemporal choice” (Loewenstein, 1996). Visceral factors lead people who otherwise display "normal" decision-making behavior to behave in ways that give the appearance of extreme discounting of the future. Due to stress experienced by the financial crisis individuals might decide to sell their house or stay in occupations they dislike or to quit their business. These decision might even have an more negative effect in the future as it has now. Individuals find themselves in a place where this seems the only way for that moment in time. “Decision-making under risk and uncertainty” is the third category of visceral factors play an important role. Visceral factors have important consequences for behavior which are mostly, underappreciated. Loewenstein (2000) suggests that to make sense of, or to predict viscerally driven behavior, it is necessary to include viscerally factors into models of (economic) behavior (Loewenstein, 2000). This way the prediction will be more accurate. To be able to accurately measure the effect of the financial crisis, these factors should be taken into account.
Netherlands, Eastern European countries and Spain, 3) reductions in unemployment benefits; Ireland, The Netherlands, Switzerland and Eastern European countries and 4) reductions in entitlements for sick leave; Estonia (Chowdhury, Islam & Lee, 2013).
At this moment it is too early to conclude the full impact of the financial crisis on social outcomes, however, increasing unemployment is, as by many studies mentioned earlier, confirmed to be present. Many countries also see an increased number of discouraged employees. An increase of part-time occupation is also witnessed at the cost of full-time jobs. Another increase is witnessed in temporary work and contracting and outsourcing (Chowdhury, Islam & Lee, 2013).
2.5 Conceptual Model
2.5.1 Dependent variable
Interest in usage of online retirement platforms
In this research the dependent variable is “interest in usage of online retirement platforms”. Previous research showed that individuals are not very interested in retirement planning in general (Ellen, Wiener & Fitzgerald, 2012; Bodie, Prast & Snippe, 2008; Pinquart & Schindler, 2007; Wang, 2007; Lusardi, 2003; Lusardi & Mitchell, 2006, 2007; Kennedy & Matwijiw, 2010). With this dependent variable the author wants to gain knowledge about the interest of individuals in the usage of online retirement platforms specifically. The reason why this variable is the dependent variable in this study, is due to the fact that this specific context has a void in literature. This is a new research topic in retirement. This study will add value not only to the companies and individuals that work with these platforms, but will as well be an addition to literature and research on retirement product usage. Several other variables are taken into consideration which are mentioned below.
2.5.2 Independent variables
2.5.2.1 Consumer involvement in long-term financial planning
The first independent variable is “consumer involvement in long-term financial planning”. With this variable the degree of consumer involvement is measured with regard to their financial planning on long-term basis. It is expected that this variable will indicate the probability of individuals interest in online retirement platforms (Ellen, Wiener & Fitzgerald, 2012; Bodie, Prast & Snippe, 2008).It is interesting to see what the influence of consumer involvement in long-term financial planning is in the current context, depending on the degree of individuals’ involvement.
The influence of this independent variable on the “interest in usage of online retirement platforms” should be positive. This expectation is built on the findings of Gollwitzer (1999, 1997) and Van Rooij, Lusardi and Alessie (2011) where the authors indicate that thinking about retirement or saving initiates action. Gollwitzer’s (1999, 1997) indicates that when individuals have involvement and concrete saving plans are made, this has a positive effect on their saving behavior. Therefore, it is expected that individuals with high involvement are most interested in using online retirement platforms.
Other variables related to long-term financial planning are expected not to indicate this as thorough as this variable since it is quite specific and related to involvement. No other variable could measure the effect of involvement as specific than involvement itself.
2.5.2.2 Consumer’s general perspective towards the future
The second independent variable is “consumer’s general perspective towards the future”.
are the outcome of deep future time perspective (Zimbardo & Boyd, 1999). Individuals with a positive future time perspective would therefore be more interested to use the online retirement platform due to their urge of making goals.
The socioemotional selectivity theory assumes that future time perspective of individuals is either “limited” or “open-ended”, depending on the characteristics of an individual and other factors (Treadway et al. 2011; Carstensen, 1992, 1995, 2005). By inserting this variable into the study, it can be investigated how individuals’ characteristics are influential in determination of belonging into one of these groups (limited or open-ended) and their general perspective. This will make the determination of the latent groups more specified.
2.5.2.3 Consideration of future consequences of one’s consumer behavior
The third and last independent variable is “consideration of future consequence of one’s consumer behavior”. The added value of this variable regarding this study and for literature concerning retirement, is that it will shed light on the thoughts and behavior of consumers towards their own consumer behavior in this new context of retirement research. The variable “consideration of future consequences of their consumer behavior” is in that sense more specific than the previous variable “consumer’s general perspective towards the future”. This variable will expectantly indicate how individuals considerate their consumer behavior (Strathman et al., 1994) and the impact of that in financial planning and the future. The impact of this variable on the dependent variable is positive, since effective self-regulation involves seeing future concerns and goals (Carver & Scheier, 1981). The knowledge of potential consequences is a measure for an individual’s behavior (Pomerantz, Chaiken & Tordesillas, 1995). The higher the consideration of the individual, the higher the effect will be on the interest in usage of the online platform.
2.5.3 Moderator
Perceived affectedness by the financial crisis
The moderator “perceived affectedness by the financial crisis” stands for the degree in which the person is affected by the financial crisis. “Perceived affectedness by the financial crisis” is chosen to measure the influence of the financial crisis on individuals concerning the above mentioned variables.
It is expected that “perceived affectedness by the financial crisis” will strengthen the relationship between the “involvement in long-term financial planning” and the “interest in usage of online retirement platforms”. The more individuals are affected by the crisis, the more involvement they will have in retirement planning (Lusardi, 2003; Gollwitzer’s, 1999, 1997) and online retirement platforms since individuals are more eager to save when they are effected by the crisis (Katona, 1975; Marshall et al., 1992). The moderating effect that is expected from “perceived affectedness by the financial crisis” on the relationship between “individuals’ general perspective towards the future” and “usage of online retirement platforms” is that it will affect it in a negative or weakening manner. This is due to the individuals vulnerability and openness regarding the crisis (Turner & Avison, 1992), the higher this is the more interested the individual will be in using the online platform resulting from its relation with perspective towards the future (Lang & Carstensen, 2002; Williams & Martinez, 2012; Yeung, Fung & Lang, 2007) and their eagerness to save (Katona, 1975; Marshall et al., 1992). Lastly, the expected influence of “perceived affectedness by the financial crisis” on the relationship between “consideration of future consequences of one’s consumer behavior” and the “interest in usage of online retirement platforms” is that the higher “perceived affectedness by the financial crisis” due to vulnerability and openness (Turner & Avison, 1992), the more positive the reaction is on the relationship of interest in usage of online retirement platform and the influence of consideration of consequences of their current consumer behavior. This is expected because individuals who feel affected are more eager to save (Marshall et al.,1992) and to have a plan for their financial achievements (Scheier, 1998; Carver and Scheier, 1981; Nenkov, Inman and Hulland, 2008). Therefore, this moderating effect will be strengthened.
To be able to measure this specific influence of financial crisis, another crisis related variable would not have been appropriate since it will miss its intended purpose of measuring the perceived affectedness.
2.5.4 Supporting the conceptual model
currently applicable information and conclusions that can assist organizations in this specific field concerning their decision-making.
2.6 Hypotheses
In this section the hypotheses of the study will be presented, based on the findings in literature from sections 2.1 to 2.4.
2.6.1 Retirement and long-term financial planning
Lack of retirement planning and interest in long-term planning has been reported to be present among many individuals in many age groups (Lusardi, 2003; Lusardi & Mitchell, 2006, 2007). A high percentage of individuals close to retirement said that they do not think about their retirement much or plan for it, which proves the seriousness of the situation (Yang & Devaney, 2011). As shown by psychological research, concrete planning with specific steps are very powerful in increasing self-discipline in retirement saving (Gollwitzer, 1997, 1999). Individuals who prepare for retirement are more comfortable emotionally and financially when the time comes (Lusardi, 2003). Thinking about saving and actual saving behavior does make individuals more involved in retirement and long-term planning. The involvement of individuals in their own financial planning does help them to achieve their saving goals (Gollwitzer, 1997, 1999; Van Rooij, Lusardi, Alessie, 2011). The theory of planned behavior (Ajzen, 1991) suggests that retirement planning consists of three factors: attitude towards the behavior, subjective norms and perceived behavioral control. Considering Gollwitzer’s (1997, 1999) research and that of Ajzen (1991), having a positive attitude and setting goals for saving predict success in long-term planning.
Based on the findings of Gollwitzer (1997; 1999), Ajzen, (1991) and Van Rooij, Lusardi, Alessie (2011), it is expected that the financial considerations of individuals’ involvement in long-term financial planning generates a positive effect on the interest in online retirement platforms, as this platform will help them achieve their saving goals by giving insight. When individuals have a high involvement in long-term financial planning, it is expected that their interest in retirement platforms is high as well (Gollwitzer ,1997, 1999; Ajzen, 1991). When individuals spend time considering their long-term financial planning or retirement planning and have their future achievements planned, this will make them eager to achieve this goal. Their interest in the online retirement platforms will be positive, since this will give insight in their achievement of their goal. Therefore, the following hypothesis regarding the individuals’ involvement in long-term financial planning and their interest in online retirement platforms can be formulated:
