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Abstract

The quote above touches on two central and divergent aspects of individual financial planning behavior for retirement: The lack of motivation to engage in financial planning and the increasing responsibility of the individual for his1 financial situation in retirement. These observations triggered the author’s interest in researching individual retirement-specific financial planning behavior (FPB); encompassing both the perspectives an individual has on his financial situation in retirement and the specific financial planning actions this individual takes. The simultaneous investigation of these two aspects of individual retirement-specific FPB is becoming increasingly important in the academic world and in practical life as the relevance of financial provision for retirement is rising for the individual, companies, policy-makers, and for society as a whole.

Keywords

Saving Rate Pension System Financial Situation Financial Planning Financial Planner 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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References

  1. 2.
    For detailed indications about the demographic developments in Germany refer to sub-chapter 3.1. Base data is originally provided by the German Statistical Federal Office as well as Pötzsch/Sommer 2003.Google Scholar
  2. 3.
    The peak of the German population is expected for the year 2012 with 83m individuals. Thereafter, the population is expected to shrink. See Stba 2003a.Google Scholar
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    The UNPD 2005 expects German migration to amount to 202,000 individuals annually, second only to the US. This corresponds to 2–3% of the population. In order to keep the working population constant until 2025, however, the net migration would have to be over 7%. See Reimann 2006, p. 18.Google Scholar
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    This research was conducted mostly in the context of 401 (k) plans as well as the introduction of private accounts in Sweden. See the collection from Mitchell/Utkus 2004b, Choi et al. 2002 or Cronqvist/Thaler 2004.Google Scholar
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    The SMarT plan is a concept for saving within DC plans defined by ThalerBenartzi 2004 in order to overcome shortcomings in the saving rate resulting from behavioral tendencies. The SMarT plan builds on four key elements that represent (re-)commitment devices: First, individuals are approached about committing savings with a time lag to the salary increase; second, the saving rate is increased for the first time with the pay raise; third, with every further pay raise, the saving rate is increased dynamically; fourth, all individuals have the option to opt out of the plan at any time. With these features it builds on the behavioral tendencies of lack of self-control, inertia, hyperbolic discounting and money illusion described in sub-chapter 4.2. Thaler/Benartzi 2004 found that participants who chose to join and stay in the plan had higher saving rates than everybody else, even those who did not contact the financial consultant and were (mostly) already saving a lot, or those to whom the financial consultant had suggested an individual, initially mostly higher, saving rate based on their needs. See Thaler/Benartzi 2004, p. 174.Google Scholar
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    See for example Börsch-Supan et al. 2004.Google Scholar
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    See Cronqvist/Thaler 2004. Other relevant research includes Palme et al. 2004 or Cronqvist 2003.Google Scholar
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    The knowledge aim sets out the aim of the research as well as the expected research results. According to Bernet 1982, research aims can have a theoretical and a pragmatic part, both of which are closely linked and relevant to this study. While the theoretical part focuses on the description of the research object, its elements, structures and processes, and then integrates them in a cause-effect relationship, the pragmatic part seeks to transfer the knowledge gained into actionable recommendations and thus shape human reality. See Bernet 1982, p. 18ff.Google Scholar
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    This placement in empirical and application-oriented research determines the quality standards and exigencies for this research study. The term “empirical” — with its original Greek meaning “based on experience” — indicates that the systematic analysis of experiences is central to this study since generally acceptable results can be verified or falsified based on experience. See Bortz/Döring 2002, p. 7 and Stier 1996, p. 4ff. The quality of these generally acceptable results depends on their practical applicability and how well they can be used in actual decision processes. See Ulrich 1981, p. 4f, 10.Google Scholar

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© Physica-Verlag Heidelberg 2008

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