Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan? / Robert L. Clark, Jennifer A. Maki, Melinda Sandler Morrill.

Format:

Book

Author/Creator:

Clark, Robert L.

Contributor:

National Bureau of Economic Research.

Maki, Jennifer A.

Morrill, Melinda Sandler.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19591.

NBER working paper series no. w19591

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Can Simple Informational Nudges Increase Employee Participation in a 401

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2013.

Summary:

We report results from a field experiment in which a randomized subset of newly hired workers at a large financial institution received a flyer containing information about the employer's 401(k) plan and the value of contributions compounding over a career. Younger workers who received the flyer were significantly more likely to begin contributing to the plan relative to their peers in the control group. Many workers do not participate in their employers' supplemental retirement savings programs, even though these programs offer substantial tax advantages and immediate returns due to matching contributions. From a survey of new hires we find that many workers choose not to contribute to the plan because they have other financial priorities. However, some non-participants lack the financial literacy to appreciate the benefit. These findings indicate that simple informational interventions can nudge workers to participate in retirement saving plans and enhance individual well-being and retirement income security.

Notes:

Print version record

October 2013.