The role and relevance of domain knowledge, perceptions of planning importance, and risk tolerance in predicting savings intentions

The need for individuals to increase retirement savings has been widely promoted, yet our understanding of the motivations of individuals to save at a higher rate remains sparse. This paper reports the findings of a survey of 2300 retirement savings fund members and their motivations to contribute more to savings and to actively manage their investment strategy. Utilising the theory of planned behavior, the study reveals respondent’s self-reported attitudes, subjective norms and perceptions of behavioral control account for a high proportion of the variance in behavioral intention. Contrary to expectations, the study finds that respondent’s risk tolerance adds little to the prediction of behavioral intention. By contrast, perceptions of planning importance and self-assessed planning preparedness (domain knowledge) are found to exert powerful indirect influences on behavioral intentions via the perceived behavioral control construct. This novel finding confirms the relevance of planning constructs and financial literacy to an understanding of retirement savings behavior, and establishes a need to improve levels of financial literacy in society.