LUBBOCK, Texas — Planning your retirement spending? A new study suggests you might come up with something more realistic if you set aside the life expectancy calculators for a few moments and take a personality quiz.
Researchers with Texas Tech University discovered that fast spenders tend to be either very open-minded, easygoing individuals or else gloomy, anxious people. People who pace their retirement spending, on the other hand, tend to be confident extroverts.
“Little is known about what personally motivates retirees to withdraw money from their investment portfolios,” says lead study author Sarah Asebedo, an assistant professor with the university and director of the Life Centered Financial Planning program, in a statement.
Most information on investment portfolio decisions revolves around minimizing financial risk and planning around life expectancy. Researchers wanted to find out how much personality plays into withdrawal decisions.
Study authors looked for clues in information collected during the 2012 and 2014 Health and Retirement Study surveys sponsored by the National Institute on Aging. They evaluated personality and psychological data from more than 3,600 people aged 50 or older, with an average age of 70. Researchers narrowed down the participant pool to those who had made withdrawals from retirement and other saving accounts. They then paired personality information with tax information for each participant to track withdrawals from individual retirement accounts.
Participants were given scores on the big five personality traits: openness to experience, conscientiousness, extroversion, agreeableness and neuroticism. Researchers also considered information on the degree of control participants felt they had over their financial situation and how often they experienced various positive and negative emotions during the previous 30 days.
“We found that those with greater conscientiousness, extroversion, positive emotions and feelings of control over their finances withdrew from their retirement portfolios at a lower rate than those with greater openness, agreeableness, neuroticism and negative emotions,” Asebedo said.
Study authors say their findings suggest that financial professionals need to include personality traits as part of the overall retirement planning strategy.
“A higher withdrawal rate is not necessarily a bad thing nor is a lower withdrawal rate always good,” Asebedo cautions.
Researchers hope financial planners will use the information in this study to create retirement spending plans that are more closely in line with the personalities of their clients.
Findings were published in the online edition of the journal Psychology and Aging.