Working Paper: NBER ID: w30723
Authors: Gopi Shah Goda; Matthew R. Levy; Colleen Flaherty Manchester; Aaron Sojourner; Joshua Tasoff; Jiusi Xiao
Abstract: We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers' retirement-savings decisions. In both conditions, the calculator projects workers' retirement income goal. In the treatment condition, it also projects retirement income based on defined-contribution savings, prominently displays the gap between projected goal and actual retirement income, and allows users to interactively explore how alternative, future contribution choices would affect the gap. The treatment increased average annual retirement contributions by $174 (2.3 percent). However, effects were larger for those with greater financial knowledge, suggesting this type of tool complements, rather than substitutes for, underlying financial capability.
Keywords: Retirement Planning; Financial Capability; Decision Support Tools
JEL Codes: D14; G53; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exponential growth bias (E71) | suboptimal decision-making in retirement savings (D14) |
| present bias (D15) | suboptimal decision-making in retirement savings (D14) |
| greater financial literacy (G53) | effectiveness of web-based retirement savings calculator (G52) |
| web-based retirement savings calculator (D14) | average annual retirement contributions (J26) |