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How Can Employers Encourage Young Workers to Save for Retirement?


  • Nicole Votolato Montgomery
  • Lisa R. Szykman
  • Julie R. Agnew


Workers under age 35 have the lowest 401(k) participation of any age group. Failing to save for retirement at a young age means missing out on compounded investment earnings that can substantially ease the burden of building a nest egg. The reasons young workers save less for retirement range from college loan repayments and low starting salaries to a desire to save for a house. Another reason is deeply rooted in psychology: when an event such as retirement is far from the future, people tend to distance themselves from it and think about it abstractly. In visual terms, it is more difficult to see the details of a photograph when one is far away - just as it is difficult for young adults to perceive old age. It will become more concrete only as they move closer. For young workers, then, retirement security lacks the urgency older workers feel. This brief reflects preliminary results from research positing that young adults' distance to retirement may discourage them from saving, and it tests what types of communication tactics might be most effective in promoting saving.

Suggested Citation

  • Nicole Votolato Montgomery & Lisa R. Szykman & Julie R. Agnew, 2012. "How Can Employers Encourage Young Workers to Save for Retirement?," Issues in Brief ib2012-7, Center for Retirement Research, revised Mar 2012.
  • Handle: RePEc:crr:issbrf:ib2012-7

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