Abstract Both insufficient saving and early withdrawal of retirement savings jeopardize financial well-being in old age, but the latter is rarely studied. We examined which individual differences relate to both regular saving and early withdrawal decisions. These decisions are economically similar (accumulating retirement assets) but psychologically different (incurring regular small losses vs. abstaining from a one-off large gain). We analyzed three representative surveys conducted in Estonia in 2020, 2021, and 2022, surrounding a policy reform that introduced an early withdrawal option to a previously mandatory pension saving scheme. Limited trust in financial institutions and non-Estonian nationality emerged as statistically and economically significant factors associated with the pair of decisions both not to save and to withdraw early. Fostering institutional trust represents a key strategic goal for pension systems. Our findings also call for caution with pension freedom reforms, which may put those who already save too little in double jeopardy.
Reinson et al. (Wed,) studied this question.