Diverse group of employees discussing retirement

Success for Savers Through Design or Default

Nov 17, 2018
Empower Institute

Success for Savers Through Design or Default

Three ways to encourage better savings habits

The vast majority of our decisions are based on what feels right. And while intuition can sometimes work in our favor, it can also lead us astray. Enter the power of encouragement. For workers, the difference between living the retirement they imagine and failing to meet their savings goals could come down to how they are encouraged — an idea that behavioral economists refer to as a nudge.

Our research shows that employers and their advisors have the potential to use the concept of a nudge to influence employees’ decision-making for the better. In particular, employers who use nudges strategically can drive better retirement savings outcomes for their employees.


Key findings

  • Well-selected retirement plan features, particularly automatic features, can nudge employees into positive savings behaviors.
  • Plan communications that give employees clear information where they want to receive it can nudge employees toward better retirement outcomes.
  • Giving employees access to digital tools that translate their savings into retirement income estimates can nudge them toward better savings rates and, thus, retirement readiness.
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