Temporal Discounting and Retirement Savings Behavior: A Quantitative Study of Future Self-Continuity, Financial Decisions, and Employee Planning

Emad Abbas Changezi

doi:10.5281/zenodo.21725751

Authors

Emad Abbas Changezi University of Gävle: Gävle, Gävleborg, SE https://orcid.org/0009-0002-8303-0856

DOI:

https://doi.org/10.5281/zenodo.21725751

Keywords:

temporal discounting, retirement planning, hyperbolic discounting, future self, financial decision-making

Abstract

This study examines temporal discounting and its influence on employee retirement planning decisions through a quantitative investigation of employees aged 25 to 55. The sample consists of 100 participants assessed for individual temporal discounting rates and corresponding retirement savings behaviors, allowing for analysis of how present-biased preferences affect long-term financial planning. Grounded in Temporal Discounting Theory (Ainslie, 1975) and the Future Self-Continuity Framework (Hershfield, 2011), the research investigates the cognitive and motivational mechanisms that shape retirement-related decision-making. Findings indicate that individuals with high temporal discounting rates save substantially less for retirement compared to low discounters, with a 62% reduction in savings despite comparable income levels. Temporal discounting is negatively correlated with retirement savings adequacy (r = −0.58) and positively associated with delays in retirement plan enrollment (r = 0.52), highlighting its broad influence on financial behavior. The results suggest that present-oriented cognitive biases significantly undermine long-term financial security planning. An experimental intervention designed to enhance future self-continuity—specifically through exposure to aged self-photographs—produced a 28% increase in intended retirement contribution rates, indicating that psychological connection to the future self can meaningfully alter financial decision-making tendencies. Multiple regression analysis demonstrates that temporal discounting rate (β = −0.38), future self-continuity (β = 0.26), financial literacy (β = 0.22), and employer match awareness (β = 0.18) jointly explain 46% of the variance in retirement savings adequacy. The study contributes to behavioral economics and organizational psychology by clarifying how intertemporal preferences shape retirement preparedness and by demonstrating the effectiveness of low-cost psychological interventions. It also offers practical implications for employers, policymakers, and financial institutions aiming to improve long-term savings behavior through behavioral design strategies.

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