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February 2025

07Feb

Smaller than We Thought? The Effect of Automatic Savings Policies

By James J. Choi, David Laibson, Jordan Cammarota, Richard Lombardo & John Beshears Medium- and long-run dynamics undermine the effect of automatic enrollment and default savings-rate auto-escalation on retirement savings. Our analysis of nine 401(k) plans incorporates the facts that employees frequently leave firms (often before matching contributions from their employer have fully vested), a large percentage of 401(k) balances are withdrawn upon employment separation, and many employees opt out of auto-escalation. Steady-state saving rates increase by 0.6% of income due to automatic enrollment and...

February 7, 2025
Articles, Savings, , , ,
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January 2025

24Jan

Influencing Retirement Savings Decisions with Automatic Enrollment and Related Tools

By John Beshears, James J. Choi, David Laibson & Brigitte C. Madrian Historically, retirees in the US relied on the “three-legged stool” of Social Security, defined benefit (DB) pension plans, and personal savings to provide retirement income.1 Beginning in the late 1970s, however, access to DB plans began to fall while access to defined contribution (DC) plans, which require individuals to make their own savings plan contributions and investment decisions during their working years, rose.2 As of December 2023, retirement assets in...

January 24, 2025
Articles, Savings, , ,
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November 2024

08Nov

Pension Policy Preferences: Beliefs about Others

By Carmen Sainz Villalba This paper studies the information provision and belief updating on the preference for regulation on pensions for own respondents and the preference for regulation on pensions for the population as a whole. Following the work of Sainz Villalba and Konrad (2024), we conduct a survey experiment where we provide information on own characteristics and on characteristics about individuals in other income brackets. We find that respondents who overestimate the pension coverage for low income earners are more likely to want less regulation...

November 8, 2024
Articles, Regulation, , ,
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October 2024

04Oct

Savings Goals Matter – Cognitive Constraints, Retirement Planning, and Downstream Economic Behaviors

By Zihan Ye, Thomas Post, Xiaopeng Zou & Shenglan Chen We study how cognitive constraints relate to each distinct step of the planning and execution process for retirement, that is, individuals’ propensity to plan, savings goals set, and economic outcomes (wealth accumulation and portfolio choice). We find that different cognitive constraints play distinct roles: Higher advanced financial literacy (and quantitative reasoning ability) predicts a greater propensity to plan, while higher basic financial literacy and verbal cognition predict setting higher savings...

October 4, 2024
Articles, Savings, , , ,
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August 2024

30Aug

Improving Pension Information: Experimental Evidence on Learning Using Online Resources

By Denise Laroze, Gabriela Fajardo, Charles Noussair, Ximena Quintanilla, Paulina Granados, Pedro Vallette, Mauricio López-Tapia Deciding what to do with one's pension funds is a high-stakes, one-shot decision. Retirement schemes are often described in technical jargon that few people understand. We consider whether the learning process can be eased by providing information in video format (vs. the standard textual format) and by changes to the user interface of the websites on which individuals learn about their pension options. The results...

August 30, 2024
System Characterization, ,
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30Aug

Improving Pension Information: Experimental Evidence on Learning Using Online Resources

By Denise Laroze, Gabriela Fajardo, Charles Noussair, Ximena Quintanilla, Paulina Granados, Pedro Valette & Mauricio López-Tapia Deciding what to do with one's pension funds is a high-stakes, one-shot decision. Retirement schemes are often described in technical jargon that few people understand. We consider whether the learning process can be eased by providing information in video format (vs. the standard textual format) and by changes to the user interface of the websites on which individuals learn about their pension options. The...

August 30, 2024
Articles, System Characterization, ,
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28Aug

US. Wealthier workers benefit most from retirement savings ‘nudges’

In the U.S. and U.K. alike, there is growing concern that people aren’t saving enough for retirement. In the U.S. specifically, around 20% of adults age 50 or over report having nothing saved for retirement, according to a recent AARP survey. Nudging behaviors — such as automatic enrollment or auto-escalation in a 401(k) plan — have historically been popular among policymakers to get people to save. However, there has been little investigation into how people adjust their spending patterns when more money is taken...

August 28, 2024
News,
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23Aug

A Wealth of Well-Being: A Holistic Approach to Behavioral Finance

By Meir Statman In A Wealth of Well-Being: A Holistic Approach to Behavioral Finance, Professor Meir Statman, established thought leader in behavioral finance, explores how life well-being, the overarching aim of individuals in the third generation of behavioral finance, is underpinned by financial well-being, and how life well-being extends beyond financial well-being to family, friendship, religion, health, work, and education. Combining recent scientific findings by scholars in finance, economics, law, medicine, psychology, and sociology with real-life stories at the intersection of finances and...

August 23, 2024
Books, Books, ,
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July 2024

05Jul

Changing Retirement Incentives and Retirement in the US

By Courtney Coile Employment rates of older Americans have been rising since the 1990s. While the US is fairly unique among advanced economies in not experiencing any large-scale pension reforms in recent decades, there have been multiple changes to Social Security policy that have strengthened the incentive to work at older ages. This study builds on prior work documenting the changes in retirement incentives over time to explore the effect of these changes on retirement behavior, using over two decades...

July 5, 2024
Articles, Pension design, , , ,
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June 2024

13Jun

UK. Auto-enrolment ambitions must go above and beyond just pensions

If I were to point to the most sensible decision made in pensions policy in the last 20 years, the introduction of auto-enrolment (AE) in 2012 would no doubt top the list. In one swoop, the mandatory law made saving for retirement the norm and improved the chances of maintaining a decent standard of living in later life for millions of employees. Of course, AE was never supposed to be the last word. It was meant to be the beginning of...

June 13, 2024
News, , ,
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