USING PRIMING INTERVENTIONS TO INCREASE RETIREMENT SAVINGS BEHAVIOR FOR SERVICE MEMBERS IN THE MILITARY RETIREMENT SYSTEM

Abstract

Retirement is one of the most significant problems facing the military currently, considering the impact of inflation on the defense budget and the externally applied pressure through the population regarding the national debt. The accelerating pace of population aging and the difficulty that service members encounter in retirement reinforce the present concerns about the prevalent poverty among veterans. Although several studies on retirement have been conducted, the emergence of behavioral finance and the incorporation of psychological principles in managing finances and saving practices have made the issue more prominent. The study looks at the interactions between psychological and cognitive factors that affect service members’ retirement savings behavior. This research investigates the possibility of adapting the Department of Defense’s current retirement plan with an alternative military retirement framework. The new structure would encourage contributors to the retirement fund to transition from a more rigid and long-term oriented contribution system to a more individualistic-orientated pension plan. The findings and consequent modifications aim to improve the effectiveness of the retirement system and utilize the priming effect towards delivering a refined framework for service members while simultaneously improving retirement savings. After conducting a thorough literature review, testable hypotheses are obtained to test the impact of the proposed independent variables. The findings indicate that the favorable effect stems from the positive correlation between the dependent variable retirement savings and the independent variables risk tolerance, parental influence, retirement goal clarity, and propensity to plan. Moreover, priming has a substantially moderating role in influencing both propensity to plan and retirement savings behavior. Consequently, a conceptual framework to adapt the current military retirement system is proposed and discussed.