Author:
Baily Martin Neil,Harris Benjamin H.
Abstract
AbstractMany families follow the life cycle model, often saving at work in a 401(k)-type plan. Owning a home and paying off the mortgage also provides an important retirement asset. For other families, though, saving is hard. Low-wage and short-term jobs, unemployment, divorce, and other setbacks can make it very hard to save. Small employers often do not have a retirement plan for their workers. Behavioral economists find that good intentions can go astray as the temptation of spending today overcomes the desire to provide for the distant future. Employers can greatly encourage participation by offering a 401(k)-type plan that automatically enrolls workers unless they choose to opt out. “Nudging” people to save is effective. There are tax incentives for retirement saving, but these are much stronger for high-income families than for those with low and moderate incomes. Policymakers and employers can do much more to encourage retirement saving.
Publisher
Oxford University PressNew York
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