BEHAVIORAL BIAS IN RETIREMENT PLANNING: A LITERATURE REVIEW
Heraeni Tanuatmodjo, Nugraha, Disman, Toni Heryana

Universitas Pendidikan Indonesia

Abstract

A decent and good life is generally always desired by every individual because it can guarantee the future. Because every individual in old age will experience a decrease in income, it becomes necessary to invest in order to get a decent life at that time.
Increasing life expectancy makes retirement an important element in human life. Many individuals desired a retirement in which they receive various profitable and sustainable benefits. However, this can only be done in a country with a good retirement system.
In this case, Indonesia is in the 92nd position among 150 countries surveyed for the global retirement ranking. When compared to other ASEAN countries, Indonesia^s ranking is still far below, especially when compared to countries with good retirement systems. The findings also showed that the Indonesian people^s awareness of making investment decisions is still low.
In order to meet the needs of retirement, some individuals invest in the present, sacrificing consumption in the present to obtain income in the future. Therefore, from a young age, individuals must carry out financial planning, namely setting aside around 30% -40% of monthly income for investment.
Based on the literature review, some research showed that because of market fluctuations, retirees still felt they didn^t have enough money, while other studies showed that making good decisions could become more challenging with age. This could be influenced by someone^s irrational attitude which was expressed in behavioral biases

Keywords: Behavioral Bias, Retirement Planning

Topic: Financial Management and Accounting