It’s more than just how much money they’ve managed to accumulate over the years till retirement; how people handle retirement money depends to a great extent on their personalities.
So says a study from NBER Retirement Research Center, which looked at how personality affects what a person does with her retirement funds (wealth decumulation).
Researchers examined retirement wealth both inside of employer retirement plans and outside, to see whether personality factors and other influences, such as market conditions and health, weighed on how much people saved or accumulated for retirement.
They found no evidence of personality affecting the assets in employer retirement plans, since such balances depended more on a retiree’s work history and earnings than on personality traits.
But when it came to funds in other types of accounts, the findings were different.
Personality traits do influence retirees’ wealth outside of their retirement plans (“nonpension wealth”), the study concluded, affecting whether retirees act to preserve their assets or instead devote less effort to preserving wealth and managing it.
In fact, says the study, “the nonpension wealth trajectory is largely attributable to personality, business cycle, and personal characteristics.”
A Squared Away blog post on the topic, from the Center for Retirement Research at Boston College, puts it this way: While people who are open to new experiences conscientiously preserve their wealth, especially after they hit their mid-60s, agreeable people just don’t do as well at holding onto their money.
Instead, the post says, “Agreeable people are known for being soft-hearted, friendly and helpful—they also tend to care less about money or about managing it. Not surprisingly, they have less wealth.”
While wealth decumulation is of course affected by numerous other factors, including the business cycle as well as personal characteristics such as marital status, employment status, education, race, gender and health, the personality traits favoring wealth preservation—serving as “protectors”—are openness and conscientiousness, while agreeableness “is a risk factor.”
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