Saving for retirement is difficult, and most Americans come up woefully short of building a large nest egg.
While there are many roadblocks that prevent folks from saving, a recent study suggests that possessing four behavioral traits greatly boosts the odds of achieving retirement savings success.
Unfortunately, just 10% of savers can claim all four traits.
Goldman Sachs Asset Management teamed up with the behavioral finance research organization Syntoniq to survey more than 5,200 workers and retirees in hopes of uncovering financial behaviors that “may help close gaps between retirement savers’ intentions and their reality.”
A Syntoniq analysis of the data determined that four traits are closely associated with greater ease in preparing for retirement. They are:
- High optimism
- High future orientation
- High financial literacy
- Having a reward orientation rather than a risk orientation
The 10% of respondents who exhibited all four traits accumulated more retirement savings and felt less stress when managing those savings.
They also were more comfortable juggling competing priorities and generally were more engaged with the process — for example, they might establish personalized financial plans or change investments when markets turn stormy.
Those who were highly optimistic were especially likely to report higher levels of retirement savings, with 83% reporting that they were on track or ahead of schedule in building their nest egg. That compares with just 41% of people who have low optimism.
The vast majority of survey respondents — 85% — had some blend of the four traits, which led to mixed levels of saving success. Another 5% had four “suboptimal” traits: low optimism, low future orientation, low financial literacy and risk focus.
In a summary of the findings, Chris Ceder, senior retirement strategist with Goldman Sachs Asset Management, says:
“The analysis suggests that people who are positive about their future may sacrifice for it in the present, establishing budgets, living below their means, and prioritizing long-term savings, while those who are primarily focused on their current quality of life may struggle with allocating to longer-term savings needs.”
Ceder adds that plan sponsors and financial advisers might be able to use the survey findings to promote optimism and future orientation in their clients as ways to boost a savings mentality.
Are you ready to begin saving for your golden years? Check out Money Talks News founder Stacy Johnson’s tips in “7 Tips to Retire With a Million-Dollar Nest Egg.”