Can your personality affect how you prepare for retirement?
Personality traits are often linked to job performance and used in identifying candidates who are the best fit for a job. But a recent research papers seems to have correlated specific personality traits to retirement success.
According to a paper recently published by the University of Michigan Retirement Research Center, a team of researchers found conscientiousness, one of the factors in the Big Five personality model, to be more strongly associated with both lifetime earnings and wealth conditional upon earnings than any other of the Big Five traits. Previously, the personality psychology literature has identified conscientiousness as the personality trait most influencing academic achievement, job performance, marital stability, physical health, and even longevity. Consistent with these findings, These associations between personality and retirement success remain significant even when controlling for years of education, demographics, and measures of cognitive ability. These results imply that more conscientious individuals both have greater lifetime earnings and save more of those earnings prior to retirement.
“Both consumption and wealth increase with conscientiousness but wealth increases faster, indicating that more conscientious persons save more out of retirement resources,” the authors wrote.
Some additional key findings:
- Personality traits operate through economic resources and consumption levels and impact one’s adequacy of preparation for retirement.
- Individuals with higher levels of conscientiousness are more likely to be economically prepared for retirement, because of greater earnings and high saving.
- Neuroticism negatively affects wealth among married persons, particularly females, while conscientiousness positively affects wealth among both males and females, and openness positively affects wealth among females.
- Among single persons, and in contrast to our findings among married persons and the overall sample, conscientiousness doesn’t predict economic preparation for retirement.
- Neuroticism negatively affects preparation for retirement among both single males and single females, while extroversion negatively affects preparation for retirement among single males.
So what’s one to do if conscientiousness or any one of the factors implies you are at risk for poor retirement preparedness?
Just as with professional development, the first step in recognizing if your personality will help or hurt career success is self-awareness. Complete a Five Factor personality trait assessment like PeopleClues, Prevue, or ASSESS to get a read on your behavior.
After taking a personality trait assessment, follow the advice of Michael Hurd, the director of the Rand Center for the Study of Aging at the Rand Corp: “Although it is hard to change our personality to become more productive, we do have the capability of modifying our spending behavior to get the right match [between our saving and spending.]”