Embed Size (px)
Citation preview
Behavioural FinanceASSOCIATE PROFESSOR JOANNE EARL
OCTOBER 2019
Acknowledging my research
partners
My Brief Today
• Converting plans into reality – understanding
factors that contribute to likely success
• Impact of cognitive decline in decision making –
how will people know if they are impacted?
• Differences in perceptions of what wealth and
poverty means.
• Factors affecting whether or not people plan
Key Concepts
Retirement• A process rather than an event• A career phase representing the repositioning of
work
Career• A person’s course or progress through life • The engagement of the individual with society
through involvement in the organisation of work
New concepts to impress your
friends
Work Centrality
Conditions of Exit
Mastery
FACTORS CONTRIBUTING TO
SUCCESS
WHAT IS SUCCESS?
11th October 2019
When we think about retirement….
Being well adjusted...more of this
8
• I am well adjusted to the changes
• I enjoy being retired
• I am busy
• Retirement has been better than I expected
• (If married or partnered) I enjoy being able to
spend more time with my spouse/partner
Being well adjusted…less of this
9
• I have real concerns about my financial situation
• I miss the stimulation that work gave me
• I wish I had started to plan for retirement earlier
• I miss the discipline that working gave me
• People don’t respect me as much now that I am
retired
• I have had to adjust to a big drop in my income
• I miss being part of the action
• Retirement has not lived up to my expectations
What predicts retirement
adjustment?
10
DEMOGRAPHIC FACTORS
Income $$$$
Support being married
Length longer the better adjusted
Age better psychological well-being over time
Gender generally women less adjusted
What predicts adjustment in
retirement?
11
ORGANIZATIONAL FACTORS
• Conditions of Exit
PSYCHOLOGICAL FACTORS
• Work Centrality
• Mastery
• Pre and post retirement planning
• Resource Accumulation
Dynamic Resources Model of
Retirement
12
DYNAMIC RESOURCE THEORY
• Our focus may be trained to be on Finances
• Interrelationships between the resources make it
impossible not to consider other influences such as
health, social support, cognitive skills, emotional
resilience and goal setting.
FINANCES HEALTH
Dynamic Resources Model of
Retirement
14
FINANCES
• Financial support to
cover family living
expenses
• personal savings
• investments
• superannuation
Dynamic Resources Model of
Retirement
15
HEALTH
• Absence of major
physical illnesses and
mental disorders
• Energy to carry out daily
activities or activities of
interest
Dynamic Resources Model of
Retirement
16
SOCIAL
• Friends and family
members
• Exchanging information
with others
• Getting emotional support
from others
• Tangible and practical
support (meals, chores,
repairs, transport)
Retirement in AustraliaTIMING: WHEN TO LEAVE AND WHY
Not as straight forward as you’d think – a lot of people
get it wrong
- 54% expect to live off Superannuation – reality is
33%
- 25% expect to live off Pension – reality is 49%
- 177,500 retired and then back out looking for work
- 37% full-timers plan to transition to part-time work
Source: ABS, 2017, Retirement Intentions Release No: 6238
With the help of…..
HOW MUCH DO I NEED TO RETIRE?
WHAT WILL I DO?
WILL MY HEALTH LAST?
19
Dynamic Resources Model of
Retirement
WHY DO I WANT TO LEAVE WORK?
WILL I BE HEALTHY ENOUGH?
HOW MUCH WILL I HAVE?
20
Dynamic Resources Model of
Retirement
21
Dynamic Resources Model of
Retirement
CAREERS
ADVISER
HEALTH
ASSESSMENT
FINANCIAL
ADVISER
Understanding
cognitive decline
WHY DOES IT
MATTER?
11th October 2019
What is dementia?Major and mild neurocognitive disorders (NCD):
• Alzheimer disease (50 – 75%) most common among older people,
especially women. Indications are short-term memory loss, apathy
and depression.
• Vascular dementia (20 – 30 %) usually caused by cerebrovascular
conditions such as strokes. Indicators include short term memory
loss and mood fluctuations.
• Frontotemporal dementia (5 - 10%) more common amongst men
and associated with early onset. Marked by mood and personality
changes, language problems and disinhibition.
• Dementia with Lewy bodies (5%). Characterised by a more rapid
onset than Alzheimer's. Presents similar to Parkinson’s disease, as
well as fluctuations in cognitive ability and visual hallucinations.
65 years
85 years
“The decade to 2020 will see the largest growth in
people with dementia (39%)”
Source: www.health.gov.au/dementia
Prevalence
Size of the Problem
• “These issues are a time bomb waiting to go
off if not addressed now”
• “….there is a risk that some with diminished
capacity to effectively manage their fund, may
nevertheless continue to do so.
• “Most don’t have a plan for what to do if they
get to this point”
Matt Bambrick, Assistant Commissioner, Self-Managed
Superannuation Funds Segment, ATO, Mar 2015
Mastery and Cognition
Mastery and Cognition related? Yes
• Increased errors on measures of cognition
related to lower levels of mastery
Evidence of withdrawal
Understanding the
difference between wealth
and poverty
IT’S NOT JUST ABOUT
THE MONEY
11th October 2019
When we think about retirement….
Gross household income
0% 10% 20%
$7,799 or less
$7,800 - $12,999
$13,000 - $18,199
$18,200 - $25,999
$26,000 - $33,799
$33,800 - $41,599
$41,600 - $51,999
$52,000 - $62,399
$62,400 - $72,799
$72,800 - $88,399
$88,400 - $103,999
$104,000 - $129,999
$130,000 - $155,999
$156,000 - $181,999
$182,000 - $207,999
$208,000 or more
Proportion of people (N=558)
0% 10% 20% 30%
$7,799 or less
$7,800 - $12,999
$13,000 - $18,199
$18,200 - $25,999
$26,000 - $33,799
$33,800 - $41,599
$41,600 - $51,999
$52,000 - $62,399
$62,400 - $72,799
$72,800 - $88,399
$88,400 - $103,999
$104,000 - $129,999
$130,000 - $155,999
$156,000 - $181,999
$182,000 - $207,999
$208,000 or more
Comfortably well off (45%)
Just enough (49%)
Not enough (6%)
Perceptions of wealth
Understanding who plans
AND WHO
DOESN’T…….
11th October 2019
Key Problems
• Not enough people plan
• People plan to leave for the wrong
reasons
• People make grand plans but do they
translate into reality?
Planning to work?
34
Self- insurance
Planning to work?
35
Self- protection
Who plans? For what?
36
Contact [email protected]
