Effects of Status Quo Bias, Financial Experience, and Income Level on Retirement Planning Decisions

Abstract

The primary objective is to examine how cognitive biases, individual financial knowledge, and economic standing shape retirement preparedness. The research employs a quantitative methodology using a structured survey distributed to 300 working individuals aged 25 to 55, representing diverse income brackets. The data were analyzed using SPSS and PLS-SEM to evaluate both direct and mediated relationships. The results demonstrate that status quo bias negatively affects proactive retirement planning by fostering inertia in financial decision-making. Financial experience positively influences retirement preparedness. Income level significantly impacts retirement planning decisions, as individuals with higher earnings are more likely to allocate resources toward future financial security. Furthermore, interaction effects reveal that financial experience partially mitigates the adverse impact of status quo bias. The findings have critical implications for policymakers, financial advisors, and organizations. Interventions aimed at reducing cognitive biases, improving financial literacy, and promoting retirement planning tools can empower individuals to make informed decisions. Tailored financial education programs and incentive schemes for lower-income groups may enhance retirement preparedness across socioeconomic strata.