Economic and psychological determination in civil servants’ investment decisions ahead of retirement

This study aims to examine the influence of economic and psychological factors on the investment decisions of Civil Servants (PNS) who are approaching retirement in West Kalimantan Province of Indonesia. The financial factors studied included investment feasibility, while the psychological factors examined were overconfidence, herding, regret aversion, and risk tolerance. Data was obtained from a survey of 176 civil servants who will retire in 2025-2029, and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The study’s results indicate that investment feasibility, overconfidence, herding, regret aversion, and risk tolerance have a positive and significant impact on investment decisions. The path coefficient and R2 values indicate that the explanatory model is quite robust (e.g., R2 > 0.50 for investment decisions). These findings reinforce the behavioral finance literature, which suggests that, in addition to economic considerations, psychological biases also play a significant role in investment decisions, particularly in the lead-up to retirement. Practical implications include the need to develop financial literacy and policy interventions that consider psychological aspects, enabling civil servants to make more informed and optimal investment decisions

Civil servants · Empirical evidence · Financial literacy · Financial risk · Investment Decisions · Panel data · Regret · Financial Literacy, Pension, Retirement Analysis · Retirement, Disability, and Employment