In the United States and Singapore – places that emphasize self-reliance – many older workers and retirees admit that, if given a do-over, they would have saved more money over the past 20 or 30 years.
Regret was more common in the United States – 54 percent of older Americans had it versus 46 percent in Singapore, according to comparable surveys in each place. Perhaps the reason Singapore has less is because the government requires that employees set aside more than a third of their income in three government-run savings accounts for retirement, healthcare, and home purchases and other investments. On the other hand, Singapore doesn’t have Social Security or unemployment insurance, and private pensions are rare.
Whatever the differences, regret is a common sentiment in Singapore and the United States. What researchers wanted to know is: what is the source of that regret?
They tested two hypotheses. One is the human tendency to procrastinate and never get around to tasks that should be a priority. The other reason is largely outside of workers’ control: financial disruptions earlier in life that sabotage efforts to save, such as a layoff or large medical bill.
Employment problems, the researchers found, were a major source of saving regrets for 60- to 74-year-olds in both places but the impact was especially strong in the United States, which historically has had a more volatile labor market than Singapore. Disruptions that interfered with workers’ ability to save included bouts of unemployment and earning less than they were expecting. Early retirements and disabilities also led to saving regrets, as did unanticipated health problems and bad investments.
But procrastination as a reason for regret did not stand up to scrutiny. In this part of the survey, individuals agreed or disagreed with various statements designed to indicate whether they were procrastinators, including whether they work best under pressure or put off things they’re not good at.
The Americans and Singaporeans who were less inclined to prepare for the future had no more regrets about how much they’d saved than those with the willpower to follow through on their long-term commitments.
For most people, life’s unpleasant surprises – and not a tendency to procrastinate – seem to be a better explanation for why it is difficult to save.
To read this study, authored by Axel Börsch-Supan, Michael Hurd, and Susann Rohwedder, see “Saving Regret: Self-assessed Life-cycle Saving Behavior in the United States and Singapore.”
The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College. Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsem*nt, recommendation or favoring by the United States Government or any agency thereof.
As an expert in financial behavior and retirement planning, I bring a wealth of knowledge grounded in both academic research and practical insights from the field. My expertise extends to the nuances of retirement savings, self-reliance, and the impact of government policies on financial decisions, particularly in the context of the United States and Singapore.
Firstly, the article delves into the regret felt by older workers and retirees in these two nations, emphasizing self-reliance. The evidence cited, comparing regret percentages in the United States (54%) and Singapore (46%), suggests a nuanced understanding of the cultural and economic factors influencing individuals' financial decisions.
The article highlights the Singaporean government's role in mandating citizens to set aside more than a third of their income in three government-run savings accounts for retirement, healthcare, home purchases, and other investments. This legislative approach is a distinctive feature of the Singaporean system, which contrasts with the absence of Social Security, limited unemployment insurance, and rare private pensions.
Researchers aimed to identify the sources of regret and tested two hypotheses: procrastination and financial disruptions earlier in life. The findings reveal that employment problems, including unemployment, lower-than-expected earnings, early retirements, disabilities, health issues, and bad investments, contribute significantly to saving regrets. Importantly, the study challenges the hypothesis of procrastination, finding that individuals inclined to procrastinate did not necessarily have more regrets about their savings.
The research, conducted by Axel Börsch-Supan, Michael Hurd, and Susann Rohwedder, contributes valuable insights into the complexities of self-assessed life-cycle saving behavior. Notably, the study was funded by a grant from the U.S. Social Security Administration (SSA) as part of the Retirement and Disability Research Consortium.
It is crucial to recognize that the opinions expressed in the research are solely those of the authors and do not represent the views or policies of the SSA, any federal agency, or Boston College. This disclaimer underscores the need to interpret the findings in the context of independent academic research rather than official government endorsem*nts.
In conclusion, this article provides a comprehensive examination of saving regrets among older workers and retirees in the United States and Singapore, shedding light on the multifaceted factors influencing financial decisions and retirement planning in these two self-reliance-focused societies.
