Do U.S. households perceive their retirement preparedness realistically?
Keywords:Retirement assessment, Retirement adequacy, Cognitive ability, Survey of Consumer Finances (SCF), Financial education
This study examines the divergence between objective and subjective assessment of retirement adequacy, analyzing U.S. households with a full-time worker age 35 to 60 in the 2010 Survey of Consumer Finances. Of those households, 58% have objective inadequacy, and 54% have subjective inadequacy, but only 52% have objective/subjective consistency. Our focus is on households with objective inadequacy, and what factors were related to being an optimist despite having objective retirement inadequacy. A logistic regression shows that households with defined benefit plans and with defined contribution plans are less realistic than those without plans, and as age increases, realism decreases.
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