2013 Conference

Financial Services

Financial Services

Prior literature on retirement saving has looked into self-control problems, financial literacy, and lack of resources. This paper explores a new approach to boost individual retirement saving by using motivational theories of regulatory focus and regulatory fit. A web-based survey was distributed, collecting 134 usable responses in total. Confirming our first hypothesis, we discovered that employees regulated by promotion orientation, focusing on achievement and gain maximization, were more likely to use traditional IRAs or employer-sponsored savings plans, because deferred tax accruing with capital produced more benefits, which strategically fit promotion-oriented respondents’ goal attainment means. Conversely, tax-free withdrawals in Roth IRAs corresponded to security, obligation, and avoidance of losses emphasized by prevention-oriented people, and prevention-focused respondents were more likely to save through Roth plans. In addition, same as our second hypothesis predicted, the strategic fit between personal goal achievement means and saving tools’ functioning mechanism was found to result in consistent and continuous contribution to retirement savings accounts. Implications for financial educators, policy makers, and future studies are provided.