Is your personality linked to your retirement spending?

Image: Sinica Kover

How quickly you spend your retirement savings may be related to your personality. And your personality may impact more than if you have debt or a plan to leave an inheritance. That’s the finding of recent research by the American Psychological Association.

“The purpose of this study was to investigate how personality traits are related to portfolio withdrawal decisions of retirees,” says Sarah Asebedo from Texas Tech University and lead author on the study.

The research involved a survey of 3,600 people who were 50 years and older (average age, 70). The participants were retirees who make withdrawals from their retirement accounts and other saving accounts.

Testing those involved in the study

Participants were scored on what psychologists call the big five personality traits:

  • 1. Openness to experience (they are creative, imaginative, adventurous and curious)
  • 2. Conscientiousness (they are organised, thorough, hardworking and cautious)
  • 3. Extroversion and 4. Agreeableness (they are sympathetic, caring, warm and helpful)
  • 5. Neuroticism (they are nervous, worrying, moody—not calm).

The researchers also looked at the amount of control participants felt they had over their finances. Added to this, they were tested on the extent of positive and negative emotions they’d experienced over the previous 30 days.

Asebedo believes this may be the first study to look beyond technical issues to human factors in retirement spending.


She reports: “We found that those with greater conscientiousness, extroversion, positive emotions and feelings of control over their finances withdrew from their retirement portfolios at a lower rate than those with greater openness, agreeableness, neuroticism and negative emotions.”

On the other hand: “What was found that people who are more agreeable or more open to new experiences—or those who are more neurotic or negative—might spend their retirement savings at a faster rate than those who are more extroverted or have a positive attitude.”

Of course, these findings don’t mean that just because you have a certain personality that this will become your strength or weakness. You get to choose how you will handle your money.

What’s important in these findings is that they can help you be aware of what may be your tendency with your finances.

Lessons to learn

With these findings, Asebedo reckons financial professionals should take the personality traits of their clients into account when they develop retirement strategies for them.

So should we as individuals. If we know we’re likely to spend more than we should we need to create and stick to a plan for our own safe-keeping. On the other hand, if we tend to be miserly, that can limit life satisfaction. Again, planning helps.

Finding professional help to create your best plan. Managing your money by gut feeling is not a plan.

Bottom line

We’re all different. We approach life differently. We have different personalities. We recognise this in working out what we plan to do in retirement. What this study demonstrates is that our personality can also impact on how we spend.

Bruce Manners: the author of Retirement Ready?, Refusing to Retire, and founder of

Category: Attitude, Emotional Health, Finances

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