Perceptions of Retirement Savings Relative to Peers

Do individuals' perceptions of how much others save for retirement influence their own long-range financial saving decisions? In this study, social comparison theory was used as a theoretical touchstone for understanding the impact of interpersonal perceptions on saving behavior. Respondents (N = 224) reported not only the amount they had saved for retirement during the previous year, but they also reported perceptions of the magnitude of their savings relative to peers and completed 6 psychological scales related to retirement planning. A 2-stage ordinary least squares (OLS) regression approach was used to examine: (a) the extent to which nine demographic indicators were predictive of individuals' retirement savings practices, and (b) whether unexplained savings from the initial regression model could be hierarchically predicted using the 6 psychological scales and perceptions of one's savings relative to peers. The findings suggest that social comparisons do account for savings practices over and above demographic and psychological indicators. Results are discussed in terms of how individuals' implicit social comparisons might shape not only their perceptions, but also their saving behavior.