Household financial decision making: Qualitative research with couples

Excuses for putting off retirement planning
It was typical for couples to rationalise not having made specific provision for retirement. Some 
planned to work beyond State Pension Age, or to sell their current home and buy a smaller, cheaper 
property, living from the proceeds of the sale. Other people claimed they had, or would, put money 
into savings accounts instead of pension schemes. Some younger people intended to save more for 
their retirement when they earned a higher salary, but explained that they could not afford to do so 
at present. 
Some individuals gave reasons for rejecting retirement planning. There were a variety of reasons for 
this, such as people’s tendency (and preference) to focus on the present, and the uncertainty they 
felt about the future or possible returns from pension products generally. However, explanations 
given for lack of retirement planning appeared to be instigated predominantly by the interview 
setting, and retrospective in nature, rather than the result of previous careful consideration.
This implies that there may be value in educating individuals who genuinely reject pension saving 
not to opt out of workplace schemes once enrolled, particularly with regard to the introduction of 
automatic enrolment. Arguably those in the Unbalanced Responsibility group should be targeted 
in this respect, since they display the most negativity towards pensions and automatic enrolment 
specifically. Conversely, the research suggests that individuals in this group are most inert when it 
comes to making retirement-related decisions, implying that they are unlikely to actively opt out of 
the scheme.

---

4
Summary
The role of inertia 
Couples were distracted from long-term financial planning by three different types of inertia that
we identified:
• The most prevalent type, ‘day-to-day inertia’, stemmed from the ongoing and constant need to 
manage the couple’s home and family. Households tended to focus on immediate needs and 
tactical financial issues, rather than strategic ones, or long-term planning. Day-to-day inertia did 
not result from a lack of disposable income, but from couples’ unwillingness or inability to devote 
thought and attention to long-term planning, as well as large numbers of short-term financial 
decisions.
• ‘Material inertia’ took effect when couples were restricted in their planning by low levels of 
disposable income, limiting their scope for decision making. Some couples also mentioned 
demands on their time from other factors, again reducing their ability to make long-term
financial plans.
• ‘Emotional inertia’ resulted from couples’ underlying fear or sense of intimidation when faced
with financial products and decision making.
The combination of the ‘unknown’ nature of pensions, the fact that they did not provide instant 
benefits, and the backdrop of multiple layers of inertia, often resulted in passive – and often 
individual – retirement-related decision making.
While all of these different types of inertia made retirement planning difficult, the resulting 
unresponsiveness indicated that people would remain in pension schemes after being automatically 
enrolled by their employer.