One of the main justifications for the Social Security program is that people may have shortfalls of wealth in their old age to support themselves through no fault of their own, while privatization advocates tend to attribute savings shortfalls to bad decision making. The Social Security approach of a program that is a hybrid of an insurance model and a savings model is well support supported by the empirical reality.
We define saving regret as the wish in hindsight to have saved more earlier in life. We measured saving regret and possible determinants in a survey of a probability sample of those aged 60-79. We investigate two main causes of saving regret: procrastination along with other psychological traits, and the role of shocks, both positive and negative. We find high levels of saving regret but relatively little of the variation is explained by procrastination and psychological factors. Shocks such as unemployment, health and divorce explain much more of the variation. The results have important implications for retirement saving policies.