Tailored Advice Leads to Better Decision-Making

The Center for Retirement Research at Boston College found that customized advice for pre-retirees can help them take smarter actions.

The Center for Retirement Research (CRR) measured initial reactions to the financial crisis in 2009, and then gave respondents customized advice on how to offset their losses. According to a CRR brief, after receiving advice on the tradeoff between working longer, saving more, and decreased retirement consumption, more than 40% decided to save more and/or work longer.   

About 25% reduced their planned increase in working years, which CRR found to be an appropriate response because these respondents were overestimating the number of additional work years needed to counteract their financial losses.  

One third did not respond to the advice. The brief said further investigation shows that these “committed non-responders” are older and more likely to have been on track before the downturn. “Perhaps these individuals already have their plans in place, are close to retirement, and feel that they’ve made good prior decisions in preparing for retirement, so they are not swayed by additional advice,” the report noted.  

The brief is here.