Are financial retirement incentives more effective if pension knowledge is high?

Matthias Giesecke and Guanzhong Yang

No 641, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We elicit preferences for retirement timing in a laboratory experiment. Subjects make retirement choices under different payoff schemes that introduce variation in financial incentives. Testing ceteris paribus conditions of the financial incentive alone shows a considerable delay of retirement once early retirement becomes financially less attractive. However, varying available information as another treatment parameter reveals considerable heterogeneity in the functioning of these incentives. Subjects who are explicitly informed about the expected pension wealth respond more strongly to financial incentives compared to those who only know their pension annuity. We conclude that the financial consequences of retirement choices become more salient to the decision maker once being informed on a forward-looking measure of pension benefits.

Keywords: retirement age; financial incentives; information treatment; pension knowledge; financial literacy (search for similar items in EconPapers)
JEL-codes: C91 H55 J26 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-age, nep-lma and nep-upt
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Journal Article: Are financial retirement incentives more effective if pension knowledge is high? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:641

DOI: 10.4419/867887426

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