The influence of psychological factors on financial planning for retirement

This study examines the psychological determinants as well as the central roles of subjective financial literacy and retirement goal clarity in affecting financial planning for retirement among individuals in China, leveraging the integrated framework of the capacity–willingness–opportunity model, image theory, and 3M model. The survey instrument was validated using expert reviews and cognitive interviews. The cross-sectional primary data from 245 individual respondents revealed a significant interplay of psychological factors in sustainable retirement planning to maintain one’s lifestyle after retirement. In contrast to prior expectations, the integrated model successfully demonstrated that a future time perspective alone is insufficient to cause people to engage in retirement planning. To foster better retirement planning behavior, individuals need to boost their self-confidence and gain better clarity on their post-retirement financial goals. Notably, this study highlights the separate roles of subjective financial literacy and objective financial knowledge. The results show the predominant influence of subjective financial literacy over objective financial literacy in shaping retirement planning decisions. This finding underscores the need for stakeholders’ intervention, as reliance on subjective factors alone might impede efficiency and hinder the realization of achieving comfortable retirement objectives. More importantly, the results of this study reveal that the effects of psychological factors on retirement planning behavior are complex and can be better understood on the basis of a multilayer motivational–cognitive framework. It is imperative for future research to explore demographic variances and diverse future time perspectives, retirement goal clarities, and risk tolerances. Longitudinal studies in retirement planning could offer valuable insights into evolving patterns, aiding in the understanding of sustainable retirement strategies.