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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
Additional contact information
Matthew R. Levy: London School of Economics and Political Science
Colleen Flaherty Manchester: University of Minnesota - Twin Cities
Joshua Tasoff: Claremont Graduate University
Jiusi Xiao: Claremont Graduate University

No 22-378, Upjohn Working Papers from W.E. Upjohn Institute for Employment Research

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 goals. 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; 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: 2022-11
New Economics Papers: this item is included in nep-age, nep-exp, nep-fle and nep-mfd
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Related works:
Journal Article: Are retirement planning tools substitutes or complements to financial capability? (2023) Downloads
Working Paper: Are Retirement Planning Tools Substitutes or Complements to Financial Capability? (2022) Downloads
Working Paper: Are Retirement Planning Tools Substitutes or Complements to Financial Capability? (2022) Downloads
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