More Health, More Wealth

Study finds people who value health are likely to begin saving for retirement at early age.

Healthy eaters also may have healthy bottom line.

Healthy eaters also may have healthy bottom line.

Why do certain people save for retirement earlier than others? According to a recent study completed by Texas Tech University researchers, individuals who can resist an unhealthy but delicious meal also are more likely to save for retirement.

The study was completed by Michael Finke, professor in the Department of Personal Financial Planning in the College of Human Sciences and co-authored by Associate Professor Sandra Huston.

Finke and Huston asked 8,000 college students how important it was to begin saving for retirement beginning with their first job. The students also were asked about certain behaviors, including smoking, drinking, drug use, seat belt use, unprotected sex, healthful eating, nutrition label use and exercise.

“College students are an important group because we know that when people get their first job the decision they make about saving for retirement is often the strongest predictor of whether they have collected adequate financial savings later in life,” Finke said.

Finke and Huston said that if people value saving from an early age, they will grow accustomed to spending less of their paycheck down the road, leading to greater savings for retirement.

The results of the survey revealed that students who were most forward-thinking in terms of health-related behaviors—healthful eating, exercise and using nutrition labels—were most likely to value saving money.

An Eye on the Future

Finke and Huston also found that these health-related behaviors were the strongest predictor of how likely the students were to say they planned to begin saving in their first job. Forward-thinking health behaviors were more indicative of retirement values than whether the student had a high GPA, completed graduate classes or majored in business.

“People don’t tend to change the percentage of income they save later on in life,” Finke said. “Intention to save can potentially have big impact on how prepared a person is for retirement, and it can help explain why there is so much variation in retirement savings.”

Finke said the findings could help explain why people who are healthier later in life also have accumulated more wealth. Investing in one’s health and in one’s retirement involve the same motivation to delay gratification for future happiness.

Although the impact of academic factors was slightly weaker than health behaviors in explaining the intention to save, Finke explained that financial planning and business classes are important because they give students information they need to make choices that will make them happiest.

“What education allows you to do is understand the consequences of your decisions,” Finke said. “Students who take a financial planning class have an increased value of retirement. They better understand what will happen in the future if they save too little.”

Finke’s newest research with doctoral student Terrance Martin expands his findings by surveying people in their 40s and 50s to determine whether health-related behaviors correlated with actual retirement savings. He will present his findings at the RAND Behavioral Finance Forum in May.


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School of Personal Financial Planning

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The School of Personal Financial Planning in the College of Human Sciences educates students on the need to focus financial knowledge on families and the achievement of their goals.

Undergraduate and graduate degree programs in personal financial planning are registered by the CFP Board. Students graduating from a CFP Board-Registered Program are eligible to sit for the CFP® Certification Examination.

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