Factors Associated With the Ownership of Individual Retirement Accounts (IRAs): Applying the Theory of Planned Behavior

Abstract

Despite the importance of retirement savings, many individuals retire with lack of adequate retirement savings. While calculating retirement savings needs was found to enhance retirement savings, little is known about what underlies this enhancement. Applying the theory of planned behavior (TPB), we developed a model in which psychological factors influence the calculation of retirement savings needs, which in turn influences the ownership of individual retirement accounts. Path analysis was used to test our model with data from the 2015 National Financial Capability Study. The results showed that favorable attitudes, strong social norms, and perceived behavioral control are associated with calculating retirement savings needs. Also, calculating retirement savings needs as well as perceived behavioral control and having an employer-based retirement plan, in turn, contributed to the prediction of individual retirement account ownership. Our results suggest it is important to understand he psychological factors behind calculating retirement savings needs and to make it easy for individuals to calculate those needs.

Financial capability: a systematic conceptual review, extension and synthesis

“…Age and gender differences are found in planning ahead, managing money, choosing products and staying informed in Malaysia (Mokhtar et al, 2020). In addition, psychological factors such as attitudes, social norms and perceived behavioral control are associated with calculating retirement savings needs (Magwegwe and Lim, 2021). While materialism has no direct effect on responsible financial behavior, cognitive impulsiveness fully mediates the relationship between materialism and responsible financial behavior among young adults in Croatia (Lu ci c et al, 2021).…”

Driving factors and micro-mechanism of residents’ participation intention in individual pension system

“…As shown in Table 6 , Table 7 , the results of each hypothesis were analyzed. H1 , H2 , and H3 proposed based on the TPB were all verified, indicating that good attitudes, strong social norms, and perceived behavioral control were related to residents' demand for individual pension [ 57 ]. Pension knowledge directly influenced participation intention (β = −0.062, p < 0.05), but the results were contrary to the expectations.…”

“…H1 , H2 , and H3 proposed based on the TPB were all verified, indicating that good attitudes, strong social norms, and perceived behavioral control were related to residents' demand for individual pension [ 57 ].…”

The Interplay of Financial Literacy on the Financial Behavior and Well-being of Young Adults: Evidence from Nigeria

“…Setting clear financial goals and developing plans to achieve them, as advocated by L'Esperance (2020), promotes informed financial decision-making and progress toward important milestones such as homeownership, retirement savings, or education funding. Magwegwe & Lim (2021) demonstrate that young adults with a good understanding of financial concepts and products are better equipped to navigate the complexities of the financial world. Financial behavior empowers individuals to make sound financial decisions, avoid costly mistakes, and seize opportunities to enhance their financial well-being.…”

“…The emergence of the Financial Capability Framework reflects a heightened awareness of the necessity to cultivate financial literacy and enhance financial well-being within communities and among individuals. While financial literacy traditionally concentrates on understanding financial concepts, the Financial Capability Framework extends this focus to encompass a broader spectrum of elements contributing to effective financial management and informed decision-making (Lučić et al, 2021;Magwegwe & Lim, 2021). L'Esperance (2020) underscores the framework's emphasis on financial knowledge, skills, and behavior as pivotal components in attaining financial well-being.…”