December 2022
02Dec

Are Retirement Planning Tools Substitutes or Complements to Financial Capability?

By Gopi Goda, Matthew Levy, Colleen Flaherty Manchester, Aaron Sojourner, Joshua Tasoff & Jiusi Xiao We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers' retirement-savings decisions. In both conditions, the calculator projects workers' retirement income goal. In the treatment condition, it also projects retirement income based on defined-contribution savings, prominently displays the gap between projected goal and actual retirement income, and allows users to interactively explore how alternative, future contribution choices would affect...

December 2, 2022
Articles, Labor Market, Pension design, , ,
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November 2022
11Nov

Preparing for Retirement Reforms

By Karen E. Smith, Eugene Steurele, Damir Cosic Each of the three pillars of the US retirement system—Social Security, employer pensions, and private savings—suffers from serious problems that could threaten the financial security of future retirees. Social Security is at risk of becoming insolvent. If policymakers fail to act, Social Security benefits will be cut by about 25 percent starting in 2035, and even with reform, some combination of a slowdown in benefit growth for retirees and higher taxes on...

November 11, 2022
Articles, Pension design, , , , ,
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11Nov

Cognitive Abilities, Self-Efficacy, and Financial Behavior

By Ning Tang This paper investigates the effect of cognitive abilities on financial behavior among older adults. Using the longitudinal dataset of the Health and Retirement Study, I find that cognitive abilities significantly affect financial behavior through two channels: ability and self-efficacy. People with higher cognition scores, who presumably are more capable of processing information and analyzing problems, achieve better financial outcomes. This positive association is especially strong in tasks having high demand of cognitive ability, which confirms the ability...

November 11, 2022
Aging, Articles, ,
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07Nov

UK. Renewed focus needed to address barriers to pension engagement

Brian Byrnes, head of personal finance at Moneybox, explores how financial advisers will be key in tackling the issue of pensions engagement. Ten years on from the launch of auto enrolment in the UK, it’s important we reflect on its success, with more people than ever before contributing to their retirement, who otherwise wouldn’t have done so. But as we look ahead, the question we’re now faced with is how can the industry improve upon the initial successes of auto...

November 7, 2022
News,
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October 2022
07Oct

Disconnected: Reality vs. Perception in Retirement Planning

By Martha Deevy & Steve Vernon This report examines potential interventions and messaging that can help pre-retirees and retirees plan ahead regarding important retirement decisions. The widespread lack of forward-looking planning has vexed retirement planners and researchers for many years. Many problems in later years could have been prevented with planning ahead. Too many people put off making important decisions, only to find themselves later in a serious crisis with limited options. Our research identified interventions and messaging that could be used by...

October 7, 2022
Books, Books, Pension design, Savings, , , ,
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07Oct

Investors’ Activity in Response to Information About Their Pensions

By Amedeus Malisa This paper uses individual-level data on fund choices in the Swedish Premium Pension to analyze how investors respond to information about their pension savings. The Swedish Pensions Agency mails an annual information letter, the Orange Envelope, to investors to provide them with tailored information about their public pension accounts. This paper examines the effect of pension communication in the Swedish Premium Pension System (PPS) by exploiting the staggered roll-out of these letters across different Swedish counties. Results...

October 7, 2022
Articles, Savings, , ,
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September 2022
09Sep

Are Retirement Planning Tools Substitutes or Complements to Financial Capability?

By Gopi Shah Goda, Matthew Levy, Colleen Flaherty Manchester, Aaron Sojourner, Joshua Tasoff, Jiusi Xiao We conducted a randomized controlled trial to understand how a web-based retirement saving calculator affects workers’ retirement-savings decisions. In both conditions, the calculator projected workers’ retirement income goal. In the treatment condition, it additionally projected retirement income based on defined-contribution savings, prominently displayed the gap between projected goal and actual retirement income, and allowed users to interactively explore how alternative, future contribution choices would affect...

September 9, 2022
Articles, Savings, , ,
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02Sep

A Behaviorally Informed Financial Education Program for the Financially Vulnerable: Design and Effectiveness

By Ernst-Jan de Bruijn, Gerrit Antonides, Tamara Madern Financially vulnerable consumers are often associated with suboptimal financial behaviors. Evaluated financial education programs so far show difficulties to effectively reach this target population. In our attempt to solve this problem, we built a behaviorally informed financial education program incorporating insights from both motivational and behavioral change theories. In a quasi-experimental field study among Dutch financially vulnerable people, we compared this program with both a control group and a traditional program group....

September 2, 2022
Articles, System Sustainability, , ,
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July 2022
28Jul

Trust and Retirement Preparedness: Evidence from Singapore

By Benedict S. Koh, Olivia S. Mitchell & Joelle H. Fong Trust is an essential component of the financial system, and distrust can undermine saving and economic growth. Accordingly, prior research has shown that survey responses to a question about ‘trust in people’ are associated with household willingness to invest in the stock market. Nevertheless, little is known about how trust shapes economic behaviors predictive of retirement preparedness. Our study draws on the Singapore Life Panel (SLP®), a high-frequency internet...

July 28, 2022
Articles, Investing, Savings, , ,
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22Jul

New Evidence on the Demand for Advice within Retirement Plans

By Jonathan Reuter & David P. Richardson. We study demand for advice within defined contribution retirement plans offered by 23 institutions where TIAA is sole recordkeeper. Advice seeking increases with age, account balance, annual contribution level, web access, and changes in marital status. More provocatively, participants who invest solely through target date funds—the dominant default investment option—are significantly less likely to seek any form of advice throughout the age distribution, raising the possibility that reliance upon defaults crowds out advice...

July 22, 2022
Articles, Pension design, , ,
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