ACCI Conference 2017

This research hypothesizes that faculty with greater financial knowledge will be more likely to select a defined contribution (DC) retirement plan over a defined benefit (DB) retirement plan. Further, the satisfaction with one’s retirement plan depends on the plan type and level of financial knowledge. The study featured a survey of faculty members employed by a university offering both DC and DB retirement plans. As expected, individuals with greater financial knowledge were more likely to select the DC plan. However, those individuals who selected the DC plan were less satisfied with their plan choice. The portability of the DC plan coupled with the individual’s greater knowledge should have led to roughly equal satisfaction levels. Market instability and loss aversion caused lower satisfaction for those in the DC plan.