TY - JOUR
T1 - Are retirement planning tools substitutes or complements to financial capability?
AU - Goda, Gopi Shah
AU - Levy, Matthew R.
AU - Flaherty Manchester, Colleen
AU - Sojourner, Aaron
AU - Tasoff, Joshua
AU - Xiao, Jiusi
N1 - Publisher Copyright:
© 2023 Elsevier B.V.
PY - 2023/10
Y1 - 2023/10
N2 - We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers' retirement-savings decisions. In both the treatment and active control conditions, the calculator projects workers' retirement income goal. In the treatment condition only, 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 higher measures of financial knowledge, suggesting this type of tool complements, rather than substitutes for, underlying financial capability.
AB - We conduct a randomized controlled trial to understand how a web-based retirement saving calculator affects workers' retirement-savings decisions. In both the treatment and active control conditions, the calculator projects workers' retirement income goal. In the treatment condition only, 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 higher measures of financial knowledge, suggesting this type of tool complements, rather than substitutes for, underlying financial capability.
KW - Exponential-growth bias
KW - Financial capability
KW - Financial literacy
KW - Present bias
KW - Retirement planning
KW - Retirement saving
UR - http://www.scopus.com/inward/record.url?scp=85169001014&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85169001014&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2023.08.001
DO - 10.1016/j.jebo.2023.08.001
M3 - Article
AN - SCOPUS:85169001014
SN - 0167-2681
VL - 214
SP - 561
EP - 573
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -
