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Trust, plan knowledge and 401(k) savings behavior*

Published online by Cambridge University Press:  18 May 2011

JULIE R. AGNEW ,
LISA R. SZYKMAN ,
STEPHEN P. UTKUS  and
JEAN A. YOUNG
JULIE R. AGNEW
Affiliation:
The College of William and Mary, Mason School of Business, P.O. Box 8795, Williamsburg, VA 23187 (e-mail: Julie.agnew@mason.wm.edu)
LISA R. SZYKMAN
Affiliation:
The College of William and Mary, Mason School of Business, P.O. Box 8795, Williamsburg, VA 23187
STEPHEN P. UTKUS
Affiliation:
Vanguard Center for Retirement Research, 100 Vanguard Boulevard, M38, Malvern, PA 19355
JEAN A. YOUNG
Affiliation:
Vanguard Center for Retirement Research, 100 Vanguard Boulevard, M38, Malvern, PA 19355
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Abstract

Plan knowledge and trust in financial institutions – two variables missing from standard neoclassical or behavioral models of decision-making – are strongly correlated to 401(k) savings behavior based on results from this paper. In voluntary enrollment settings, plan knowledge and demographic characteristics are related to participation in a 401(k) plan. In automatic enrollment settings, trust in financial institutions and knowledge of an available plan match are related to participation. Although this study cannot prove causality of the relationships, it does extend our understanding of the complex factors underlying savings choices. Policy implications are discussed.

Keywords

Behavioral finance401(k)trustfinancial literacysavings
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 11 , Issue 1 , January 2012 , pp. 1 - 20
Copyright
Copyright © Cambridge University Press 2011

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