How Line Graphs of Compound Growth Shape Retirement Investing Judgments

Abstract

In planning for retirement, consumers must project how investments grow through compound returns. Across five experiments with young adults who had not begun investing for retirement, we examine how presenting identical compound growth projections as line graphs rather than numerical tables affects retirement investing judgments and planned contributions. Building on research on numerical cognition and information visualization, we propose that line graphs make compound growth acceleration more apparent, increasing consumers' confidence in the growth potential of investing and strengthening their belief that they can accumulate adequate retirement wealth. We provide evidence that line graphs increase perceived compound growth acceleration, strengthen growth confidence and retirement goal achievability, and, under some conditions, increase planned retirement contributions. These findings advance research on consumer financial decision-making by showing that the visual presentation of investment projections can shape retirement investing judgments, even when the underlying financial information is identical.