A Framework for Setting Retirement Savings Goals

The purpose of this paper is to develop a framework for calculating savings needed to meet retirement goals under a variety of alternative assumptions about the economic and institutional environment. A “base case” that incorporates a zero real rate of interest serves as a starting point; next, differences resulting from a positive interest rate are examined. The analysis is further modified to take into account the effects of inflation, the role of Individual Retirement Accounts (IRAs), and possible future changes in tax laws. Throughout, the goal is to evaluate how best to plan for a smooth, regular consumption level before and after retirement and to adjust savings programs for changes in one's situation or expectations. The framework provided herein is expected to be useful to consumer educators and financial counselors concerned with helping individuals to meet their retirement goals.     

Marketing retirement—or staying on the job

Financial packages provide the most common incentive to meet the legal requirement that retirement be voluntary. However, managers have other tools to encourage retirement or encourage staying on the job—within legal constraints and consistent with current health insurance changes that may make pre-65 retirement more desirable. In using these tools, managers must consider demographic realities that offer a large cohort available to replace retirees. To assist managers, a qualitative study among human resource experts probed how companies decide between encouraging retirement and encouraging staying on the job and also how each is accomplished to maintain a workforce best matched to job requirements. Suggestions for marketing retirement include starting early to encourage saving so that employees can afford to retire and improving the retirement ‘product’ by flexible alternatives to full-time work, including self-employment. Suggestions for keeping employees on the job include tailoring schedules and rewards to the preferences and needs of individuals who might otherwise retire.     

Cognitive Ability and the Stock Reallocations of Retirees during the Great Recession

Retirees are increasingly responsible for managing their retirement savings. The ability to manage these assets efficiently can have an important impact on retirement well‐being. Lower levels of cognitive ability in old age can reduce an investor's ability to control emotional responses to a loss. Greater sensitivity to loss may increase preferences for safety following a market decline, resulting in allocations away from stocks that are associated with long‐term underperformance. We investigate whether cognitive ability is related to stock reallocations among retirees during the Great Recession. Using the Health and Retirement Study, we find that cognitive ability is negatively related to allocations away from stock. Compared to those with the lowest levels of cognitive ability, respondents with higher cognitive ability are 40% less likely to reduce their stock allocation by 50% or more. These results suggest that the quality of investment decisions in old age may be compromised by cognitive decline.     

Does Sleep Really Matter? Examining Sleep among Salespeople as Boundary Role Personnel for Key Job Factors

ABSTRACT

Purpose: Sleep deprivation among employees has become commonplace in the workforce. In the United States, the number of hours individuals sleep per night has declined by an hour and a half per night since the 1960s. As of 2005, seventy-four percent of individuals were getting less than eight hours of sleep per night on weekdays. There are negative ramifications to the organization when employees are sleep deprived such as lost productivity, increased accident rate, and increased absenteeism.

Originality/Value/Contribution of the paper: Although prior research has investigated the impact that sleep deprivation has on unique job positions (e.g., shift workers, transportation), no research has investigated how sleep impacts business-to-business sales employees. Due to the responsibilities of business-to-business sales employees, this type of position should not just be lumped in with other organizational employees. For example, business-to-business sales employees are boundary spanning employees that are responsible for generating revenue for the organization. These sales employees are also more likely to be physically, socially, and psychologically separated from the organization since they frequently work outside of the office. Because of these distinctive roles, this study examines if differences based on sleep duration exist for business-to-business sales employees for two individual and five organizational factors. The two individual factors consisted of grit and happiness while the five organizational factors consisted of perceived organizational support, perceived supervisory support, job satisfaction, organizational commitment, and turnover intentions.

Methodology/Approach: Data was collected from 320 business-to-business sales employees using a cross industry survey. The survey was conducted using a Qualtrics panel. Sleep duration was broken into two groups with one group consisting of business-to-business sales employees who sleep, on average, seven or more hours per night and the other group consisting of business-to-business sales employees who sleep, on average, six or less hours per night. The sleep duration groups were determined based on prior research that found adults should regularly sleep seven or more hours per night in order to support optimal health. There were one hundred thirty-four respondents who slept six hours or less and one hundred eighty-six respondents who slept seven or more hours, on average, per night.

Findings: The research question developed was answered by examining the differences between means for the two individual constructs and the five key organizational constructs. Differences in sleep duration for six of the seven sales constructs. There were significant differences between those that slept seven or more hours per night from those that slept six or less for grit, perceived organizational support, perceived supervisory support, job satisfaction, organizational commitment, and turnover intentions. Results found that business-to-business sales employees that slept seven or more hours per night exhibited more grit than those that slept six or less hours per night. In addition, business-to-business sales employees that slept six or less hours per night had higher perceptions of both organizational and supervisory support than those that slept seven or more hours per night. Furthermore, business-to-business sales employees that slept six or less hours per night displayed higher job satisfaction and organizational commitment than sales employees that slept seven or more hours per night. Finally, business-to-business sales employees that slept seven or more hours per night indicated higher levels of turnover intentions than sales employees that slept six or less hours per night. There were no significant differences between the two sleep groups for sales employee happiness. Although some of these results may appear to be counterintuitive, conservation of resources theory can be used to explain these findings.

Research Implications: This exploratory study showcases the importance of good sleep among business-to-business sales employees. This study draws on the conservation of resources theory literature to explain the counterintuitive findings. This theory posits that individuals will retain and guard against resource depletion. Additionally, as resources become depleted, other resources are valued to a greater extent. In this study, the resource being depleted is the condition of sleep. When business-to-business sales employees experience a lower average amount of sleep per night (i.e., six hours or less), they perceive higher levels of support, job satisfaction, and organizational commitment than business-to-business sales employees who experience a higher average amount of sleep per night (i.e., seven hours or more). Although this study provides a good initial examination of how sleep impacts sales organizations, this study also highlights the need for additional business-to-business sales employee sleep research. This is the first study that has examined how sleep duration impacts business-to-business sales employees.

Practical Implications: This study is important to sales research because it highlights the impact that poor sleep of business-to-business sales employees has on the organization. For sales organizations, we provide guidance on ways a sales organization can help promote healthy sleep for their business-to-business sales employees. Some examples of guidance provided can be categorized into four primary categories. These categories include (1) proper sleep education, (2) sales management training, (3) creating a sleep friendly workplace environment, and (4) creating specific workplace policies to minimize sleep disturbances such as setting reasonable work hours and sleep accommodating travel schedules.     

Consumer satisfaction of retirees: products and services

This study was designed to assess the nature and extent of consumer satisfaction of retirees at two stages of retirement: Stage I, age 60–69; Stage age 70 and above. This cross-sectional mail survey study contained 196 retiree households selected at random, representing retirees who had been retired for at least 1 year and were 60 years of age or older. Results indicate that retirees are in fact a heterogeneous group of consumers who are generally self-reliant, with varying consumer problems and varying reasons for those problems. Results of this study, collectively, lend support to the notion that age alone is not an appropriate way of studying consumer concerns of retirees. Additionally, retirees' stage of retirement has no significant relationship to the person responsible for the weekly household shopping. Finally, reasons for consumer dissatisfaction are not related to the weekly household shopper.     

The Roles of Gender and Marital Status on Risky Asset Allocation Decisions

We analyze data on asset allocations in individual retirement accounts to examine the roles of marital status and gender on investment decisions. We utilize data from two birth cohorts to understand the relationship over a wide age range. We find that, in their 30s and early 40s, men are more likely to hold a majority of their funds in stocks in individual retirement accounts compared to women. The gender difference disappears around retirement age; however, a significant difference by marital status emerges in that age group. Divorced and widowed individuals are less likely to hold a majority of their funds in stocks compared to married individuals in their 60s. While there exists a positive gap in stock holdings between married men and married women in their 30s, the gender gap is nonexistent among older individuals. Using paired data on stock holdings in the older birth cohort, we show that husbands' and wives' asset allocations in individual retirement accounts are strongly correlated, coinciding with the lack of a gender gap in stock holdings among older couples.     

The Impact of Retirement on Household Leisure Expenditures

Household leisure expenditures for retired and near‐retired households were examined in order to better understand the dynamics associated with the move to retirement status. Data from the 1995 Consumer Expenditure Survey indicated that retirement, total expenditures, and education had positive impacts on leisure expenditures. For retired households, greater total expenditures and education increased expenditures, while age and the presence of earned income decreased expenditures. For near‐retired households, greater total expenditures, education, and the presence of asset income significantly increased leisure expenditures.     

How Financially Literate Are Women? An Overview and New Insights

We document strikingly similar gender differences in financial literacy across countries. When asked to answer questions that measure knowledge of basic financial concepts, women are less likely than men to answer correctly and more likely to indicate that they do not know the answer. Both young and old women show low levels of financial literacy. Moreover, women for whom financial knowledge is likely to be very important—for example widows or single women—also know little about concepts relevant for day‐to‐day financial decisions. The gender differences are present for very basic as well as more advanced measures of financial literacy. This is important because financial literacy has been linked to economic behavior, including retirement planning and wealth accumulation. Women live longer than men and are likely to spend time in widowhood. Thus, improving women's financial literacy is key to helping them prepare for retirement and promoting their financial security.     

Narrow Framing and Retirement Savings Decisions

Theoretical studies suggest narrow framing underlies individuals' saving decisions. When narrow framing is applied to retirement savings decisions, narrow framers tend to make decisions about present consumption without considering future consumption, i.e., saving for consumption in retirement. Time preference for the present and narrow framers' preference to maintain the status quo lead to a decision that is less likely to increase savings for retirement. This study provides empirical evidence that narrow framing bias affects retirement savings decisions. Using a two‐part model, the probit estimation indicates narrow framers anticipated being less willing to increase retirement savings contributions compared to broad framers, and the OLS regression estimates that narrow framers anticipated contributing less than broad framers. Here, narrow framers anticipated being less willing to increase retirement savings (62.6% vs. 71.9%) and contributing less ($70.90 vs. $88.40) than broad framers, thus providing empirical evidence regarding the effects of behavioral biases on financial decisions.     

Consumer Research and Programs for the Elderly—The Forgotten Dimension

Older Americans are the most victimized and disadvantaged group in the marketplace, yet few consumer research, education, and action programs have focused on their needs and concerns. This study, by attempting to summarize existing knowledge of the consumer problems and needs of older persons, reveals the lack of reliable data and research. The study also suggests that inflation has a far worse impact upon the elderly than previously thought, affecting not only their retirement financial condition but also their psychological and social condition. The study concludes that traditional consumer education programs focusing only upon persons' poverty of means will be ineffective unless they include an additional focus on the poverty of meaning in the lives of older consumers.     

Gender differences in the work commitment of Chinese workers: An investigation of two alternative explanations

This study explores the differences in work commitment between Chinese male and female employees. We develop a model that specifies the major antecedents of job and organizational commitment in the Chinese workplace. We then examine whether the gender differences can be attributed to factors related to gender role ideology or unfavorable work conditions encountered by women. Several hypotheses are formulated and tested with a data set collected from 582 employees in Beijing. The findings reveal that employee work commitment is related to organizational support, job characteristics, and perceptions of gender discrimination. Further, it is found that the level of job commitment of women is lower than that of men, whereas the level of organizational commitment is the same for both sexes. The lower level of job commitment of women is due largely to their stronger perception of gender discrimination, receiving less challenging job assignments, and engaging in a low level of leader–member exchange. The theoretical and practical implications of these findings are discussed.     

Expectations of Inflation: The Role of Demographic Variables,Expectation Formation,and Financial Literacy

When financial decisions have consequences beyond the immediate future, individuals' economic success may depend on their ability to forecast the rate of inflation. Higher inflation expectations have been reported by individuals who are female, poorer, single and less educated. Our results suggest that these demographic differences in inflation expectations may be partially explained by variations in expectation formation and financial literacy. Specifically, higher inflation expectations were reported by individuals who focused more on how to cover their future expenses and on prices they pay (rather than on the US inflation rate) and by individuals with lower financial literacy.     

Foreign Direct Investment in Africa: The Role of Natural Resources,Market Size,Government Policy,Institutions and Political Instability

Data from several investor surveys suggest that macroeconomic instability, investment restrictions, corruption and political instability have a negative impact on foreign direct investment (FDI) to Africa. However, the relationship between FDI and these country characteristics has not been studied. This paper uses panel data for 22 countries over the period 1984–2000 to examine the impact of natural resources, market size, government policies, political instability and the quality of the host country's institutions on FDI. It also analyses the importance of natural resources and market size vis‐à‐vis government policy and the host country's institutions in directing FDI flows. The main result is that natural resources and large markets promote FDI. However, lower inflation, good infrastructure, an educated population, openness to FDI, less corruption, political stability and a reliable legal system have a similar effect. A benchmark specification shows that a decline in the corruption from the level of Nigeria to that of South Africa has the same positive effect on FDI as increasing the share of fuels and minerals in total exports by about 35 per cent. These results suggest that countries that are small or lack natural resources can attract FDI by improving their institutions and policy environment.     

What moves option‐implied bond market expectations?

This article examines the impact of macroeconomic news announcements on bond market expectations, as measured by option‐implied probability distributions of future bond returns. The results indicate that expected bond market volatilities increase in response to higher‐than‐expected inflation and unemployment announcements. Furthermore, the asymmetries in bond market expectations are found to be affected mostly by surprises in inflation and economic production figures. In particular, it is found that higher‐than‐expected inflation announcements cause optionimplied bond return distributions to become more negatively skewed or less positively skewed, implying a shift in market participants' perceptions toward future increases in interest rates. Finally, the results indicate that market expectations of future extreme movements in bond prices are virtually unaffected by macroeconomic news releases. Some evidence is found, however, that suggests that after extreme surprises in inflation announcements market participants attach higher probabilities for extreme movements in bond prices. © 2005 Wiley Periodicals, Inc. Jrl Fut Mark 25:817–843, 2005     

Perceived threats of terrorism and job performance: The roles of job-related anxiety and religiousness

This study investigates the relationship between employees' perceptions of the threat of terrorism and job performance, as well as a potential mediating effect of job-related anxiety and a moderating effect of religiousness on this relationship. Multisource, time-lagged data from employees and their supervisors in Pakistan reveal that an important reason that perceived threats of terrorism diminish job performance is the anxiety that employees experience at work. Employees' religiousness buffers the negative effect of perceived threats of terrorism on job-related anxiety though, such that the relationship is mitigated when their religiousness is high. Finally, the results indicate the presence of moderated mediation: the indirect effect of perceived threats of terrorism on job performance is not as strong at higher levels of religiousness. In external environments in which terrorism presents a credible threat, organizations can therefore consider the religiousness of their employees as a resource for countering their anxiety.     

Knowledge and Perceptions of Superannuation in Australia

Least squares and binary logit models are used to predict knowledge and perceptions of superannuation (private pensions) in Australia on the basis of demographic, socioeconomic and financial characteristics. The data is drawn from the ANZ Survey of Adult Financial Literacy in Australia and relates to 2,516 superannuation fund members. Knowledge of superannuation is defined, amongst other things, in terms of understanding superannuation fees, charges and statements, recognising the voluntary and compulsory nature of additional employee and employer contributions, and being aware of the lower taxation of superannuation compared to other investments. Factors examined include gender, age, ethnicity, occupation, educational level, and family structure, along with household income, savings, and debt. In terms of specific superannuation knowledge, substantially more than half of respondents knew that employers are obliged to make contributions on behalf of employees and that employees can make additional voluntary payments above these payments. Slightly more than half knew that superannuation is taxed at a lower rate than other investments. However, only one-third of fund members knew how to read and understand their statements or the approximate rate of contribution employers were required to make on their behalf, or had worked out how much they needed to save for retirement. Overall, about 60% of respondents could correctly answer only 50% or less of the questions posed. The evidence also suggests that knowledge of superannuation is unevenly spread across respondents. Such knowledge is generally lowest for females, those from a non-English speaking background, those with low levels of education and persons aged less than thirty. Knowledge is generally better for professionals, those aged over 40 or nearing retirement and the university educated. The models best predict the compulsory nature of employer contributions, the voluntary nature of employee contributions, and knowledge that the government will not make up any gap arising from a failure to undertake retirement planning.     

Financial Literacy among the Young

We examined financial literacy among the young using the most recent wave of the 1997 National Longitudinal Survey of Youth. We showed that financial literacy is low; fewer than one-third of young adults possess basic knowledge of interest rates, inflation and risk diversification. Financial literacy was strongly related to sociodemographic characteristics and family financial sophistication. Specifically, a college-educated male whose parents had stocks and retirement savings was about 45 percentage points more likely to know about risk diversification than a female with less than a high school education whose parents were not wealthy.     

Employer liability for telecommuting employees

Telecommuting is a work arrangement in which an employee regularly works at a site other than the employer's place of business—often the employee's home or a so-called telework center. Telecommuting may increase employees' job flexibility, retention, productivity, and motivation. However, telecommuting also carries distinct implications for legal liability. Among the issues are safety, adherence to disability-access laws, and wage and hour regulations. For instance, employers face issues connected with workplace safety, because they can be held accountable for accidents at a telecommuter's home office (even though the employer does not manage the premises). Telecommuting may come to be seen as a “reasonable accommodation” under the Americans with Disabilities Act, although few cases have been decided regarding this contention. Moreover, the simple fact that an employee is setting her own hours does not exempt the employer from the wage and hour provisions of the Fair Labor Standards Act. Workers must either fit that law's specific exemptions from hourly and overtime pay or else keep careful track of their hours. Perhaps the most important means of limiting problems arising from telecommuting is to implement a firm, company-wide policy (rather than apply ad hoc criteria), and to make certain that both job duties and the worker personally are suited to the minimal supervision and self-direction involved in telecommuting.     

Automatic Enrollment and Its Relation to the Incidence and Distribution of DC Plan Contributions: Evidence from a National Survey of Older Workers

Automatic enrollment has been widely embraced for raising employee participation in 401(k) plans. However, the empirical evidence on the effect of automatic enrollment on plan contributions and retirement saving overall is still imperfect. Using nationally representative data from the Health and Retirement Study (HRS), we find that although automatic enrollment is associated with a higher proportion of workers participating in DC plans, automatically enrolled workers are less likely to contribute to their DC plans and contribute on average less than their voluntarily enrolled counterparts. In contrast, employers of auto‐enrolled workers on average contribute more to their employees' accounts than do the employers of voluntarily enrolled workers. Even so, the combined effect is that the total annual contribution rates of automatically enrolled older workers are 1.6 percentage points lower than those of voluntarily enrolled workers.     

PURPOSE-BUILT RETIREMENT HOUSING FOR SALE

Sheltered housing for the elderly has traditionally been provided by local authorities and charitable organizations but it seems that they can no longer meet the housing needs of this group. In the last few decades, there has been a significant rise in home-ownership amongst retired people. Two features of this are important. First, those retired people who have been used to owning their own homes may be unwilling to consider somewhat institutional types of housing. Second, as a group, although eligible for specialist retirement housing provided by local authorities and charitable agencies, elderly owner-occupiers find it nearly impossible to qualify for such accommodation as they are not considered to be in need. Recently there has been a move by the private sector to provide purpose-built accommodation for sale to the elderly. How far the needs of the elderly can be met by this type of housing was investigated in two related studies. The first involved interviewing a sample of residents living in sheltered accommodation, while the second study surveyed respondents of retirement age at present living in ordinary housing. The investigation has shown that a considerable demand exists for purpose-built housing for sale to the elderly.