Beyond financial knowledge and IQ: The effect of temporal values on pension planning, homeownership and financial wealth of natives and immigrants in the Netherlands

We study pension planning and financial wealth of natives and immigrants (N=1177) in the Netherlands, in relation to their temporal values (past/future-focused), financial knowledge, IQ, and other individual characteristics. We find that, compared to natives, immigrants are less financially literate and rely more on the government for their retirement income, but are more future-focused and think more about their retirement. Second, controlling for financial knowledge, IQ, saving intention, health, self-control and demographic factors, temporal values help to predict many aspects of pension planning: how much people think about retirement, their desired retirement age, whether they develop a plan to save for retirement, perceived saving adequacy, and home ownership. Furthermore, temporal values predict savings and financial wealth in 2016 and 2020, even after controlling for the financial situation in 2016. In conclusion, habitually attending to the past leads people to give less priority to the future compared to the past, which has consequences for people’s planning and behaviour such as retirement planning and financial well-being. Our results have strong implications for policies related to pension communication and contribute to the theory on relationships between economic decisions, time and cognition.