Three essays on financial well-being and retirement planning behavior

Date

2022-08

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Abstract

Financial satisfaction and the appropriate use of financial knowledge can maximize individuals’ overall well-being. To have a successful retirement, it is essential to understand how to deal with frequent conflict, ongoing financial strain, and how individuals’ financial investment decisions affect their subjective well-being in their retirement years. The following three essays examine the association between frequent conflict, ongoing financial strain, equity holding, and retirement satisfaction. The first essay uses The National Longitudinal Survey of The Youth (NLSY97) to examine the association between the level of conflict experienced by a couple and having a retirement savings account. Frequent conflicts can affect the satisfaction of the relationship and have a destructive influence on the quality of couples’ financial decisions, such as saving for retirement. However, the result obtains that there is no statistical significance supporting the hypotheses suggesting the association between the level of conflict between couples and retirement savings. The second essay uses the 2016 wave of the Health and Retirement Survey to investigate whether the ongoing financial strain is associated with suboptimal financial outcomes, as measured by three financial ratios: (a) liquidity ratio, (b) investment ratio, and (c) debt-to-asset ratio. The results of this study align with the theory that suggests ongoing financial strain creates psychological impairment that limits individuals' ability to cope with stress and leads to disadvantageous financial decisions and performance. The results point to the importance of seeking help from financial counselors and therapists when experiencing financial strain and associated stress. The third essay examines the association between the ratio of equity holding to total financial assets in a portfolio and retirement satisfaction. The analysis uses data from the RAND version of the 2018 Health and Retirement Survey and estimates an ordered probit model. The main results suggest that the ratio of equity holdings to total financial portfolio assets is associated positively with the probability of having greater retirement satisfaction.


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Keywords

Frequent Conflicts, Retirement Savings, Financial Satisfaction, Ongoing Financial Strain, Financial Outcomes, Equity Holding, Financial Portfolio Assets

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