Testing a Model on Psychological Antecedents of Entrepreneurs’ Financial Retirement Security

Abstract Unlike wage earners, who benefit from institutional scaffolding, entrepreneurs operate in a structural vacuum when it comes to retirement, bearing the full burden for their future security. Our 4-year study of 191 senior Finnish small business owners investigates the psychological mechanisms, cognitive, conative, and affective, that drive financial security in this high-autonomy context. We find that financial planning knowledge, retirement goal clarity, and positive affect are significant antecedents of security, but active financial planning behaviors fully mediate these relationships. These findings make two key contributions. First, we resolve the “optimism paradox” in entrepreneurship; contrary to speculation that optimism leads to negligence, we find that positive affect serves as a vital resource that fuels planning efforts. Second, the full mediation effect confirms that in the absence of external “opportunities” such as mandatory pensions, psychological dispositions do not passively translate into wealth; they must be catalyzed into behavioral execution to prevent resource deficits.