Are retirement planning tools substitutes or complements to financial capability?

Gopi Goda, Matthew R. Levy, Colleen Flaherty Manchester, Aaron Sojourner, Joshua Tasoff and Jiusi Xiao

Journal of Economic Behavior & Organization, 2023, vol. 214, issue C, 561-573

Abstract: 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.

Keywords: Retirement planning; Retirement saving; Exponential-growth bias; Present bias; Financial literacy; Financial capability (search for similar items in EconPapers)
JEL-codes: D14 G53 J32 (search for similar items in EconPapers)
Date: 2023
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Related works:
Working Paper: Are Retirement Planning Tools Substitutes or Complements to Financial Capability? (2022)
Working Paper: Are Retirement Planning Tools Substitutes or Complements to Financial Capability? (2022)
Working Paper: Are Retirement Planning Tools Substitutes or Complements to Financial Capability? (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:214:y:2023:i:c:p:561-573

DOI: 10.1016/j.jebo.2023.08.001

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