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Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan?

  • Robert L. Clark
  • Jennifer A. Maki
  • Melinda Sandler Morrill

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19591.

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Date of creation: Oct 2013
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Publication status: published as Can Simple Informational Nudges Increase Employee Participation in a 401(k) Plan? Robert L. Clark1, Jennifer A. Maki2 andMelinda Sandler Morrill3, Southern Economic Journal Volume 80, Issue 3, pages 677–701, January 2014
Handle: RePEc:nbr:nberwo:19591
Note: AG LS
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