The Hidden Benefits of Voluntary Retirement Saving Programs

Abstract The financial situation of households can change dramatically after retirement, with important consequences for their financial well-being. Using a within-subject fixed-effects analysis of a representative sample of individuals in Switzerland that controls for unobserved individual characteristics, this study examines whether participation in voluntary retirement saving programs helps explain why households entering retirement with similar financial resources assess their financial well-being differently. The findings indicate that participants in voluntary retirement saving programs experience a less severe decline in subjective financial well-being, despite facing equivalent income reductions post-retirement. This effect differs from other wealth effects related to savings accumulation and is particularly strong for households with below-average pre-retirement income. These results broaden the perspective for policymakers promoting voluntary retirement savings and enhance our understanding of how to sustain subjective financial well-being over the life cycle.