Workshop Series: Doug Foster
We analyze focus group discussions about long-run (retirement) financial decisions. We find that persons of all ages understand the importance of long-term savings, but face many challenges in preparing for retirement. Participants provide mixed support for oft-used behavioral explanations of financial choice. Complexity, relevance of decisions, and uncertainty came up repeatedly in all focus groups, irrespective of the age of the participants. The use of heuristics, confidence, cost of mistakes, mental accounting, and the importance of social interaction appeared of less immediate relevance to all groups. There appears to be a general view that breaking large, complex retirement decisions into more manageable pieces (based on personal circumstances) and providing more focused and relevant information to investors would result in more effort and care expended on long-term retirement decisions.