Save more tomorrow pdf

Save more tomorrow is a behavioral intervention pioneered by richard thaler and i that is designed to make saving for retirement as easy and painless as possible. Download this document for economic psychology at maastricht university for free and find more useful study materials for your courses. Save more tomorrow is a retirement savings plan developed by richard thaler and shlomo benartzi that incorporates insights from. The employees who fail to join the plan or who participate at a very low level appear to be saving at less than the predicted life cycle savings rates. Save more tomorrow is a behavioral intervention pioneered by richard thaler and i that is designed to make saving for retirement as easy and painless as. Practical behavioral finance solutions to improve 401k plans benartzi, shlomo on. Save more tomorrow using behavioral economics to increase employee saving. People struggle to save enough for retirement, but a redesign of the pension plan can help. We then use principles from psychology and behavioral economics to devise a program to help people save more. Save more tomorrow is the first comprehensive application of behavioral finance to improve retirement outcomes.

We report data from one firm that has implemented the program. Save more by showing them images of their future selves. As firms switch from definedbenefit plans to definedcontribution plans, employees bear more responsibility for making decisions about how much to save. The save more tomorrow smart program of thaler and benartzi 2004 has been pointed to as an example of how. The program is called save more tomorrow smt, and the basic idea is to give workers the option of committing themselves now to increase their savings rate later, each time they get a raise. The smart program uses psychology to help employees save. Save more tommorow, or smart, is a pension program created by thaler and benartzi, designed to circumvent the above mentioned obstacles, thereby empowering people to save more. Behavioral explanations for this behavior stress bounded rationality and self. Using behavioral economics to increase employee saving. The program has varied in implementations, but has four main features. Behavioral explanations for this behavior stress bounded rationality and selfcontrol and suggest that at least some of the lowsaving households are making a mistake and would welcome aid in making decisions about their saving. First, we ask people to commit now to saving more in the future.