NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

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

NBER Working Paper No. 19591
Issued in October 2013
NBER Program(s):   AG   LS

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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Document Object Identifier (DOI): 10.3386/w19591

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