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Why aren’t people saving enough for retirement? Behavioural science might have the answers and the solutions, writes Meghan Phillips Dykstra for the Traverse City Business News.
“Saving is not easy. There are competing demands in raising children and purchasing a home versus future retirement needs. All Americans would like to retire well, but few feel confident that they will,” she writes, adding that convenience often overcomes reluctance when it comes to doing things we should do, but often don’t.
“The recent winner of the Nobel Memorial Prize in Economic Sciences, Richard Thaler, a behavioural economist, explains how we can make decisions to nudge us toward a better retirement outcome. Ultimately, he found that the easier a decision is to make, the more likely we are to make it,” writes Dykstra.
Plans like occupational pensions and Social Security don’t rely on people making active decision to work. Rather, contributions are automatic, made from payroll, “allowing the employee to have retirement savings with no effort.”
With fewer occupational pensions around and Social Security not en0ugh to meet retirement needs, savers often need to be be proactive in putting money aside for retirement, and human nature can get in the way – as do those other competing needs.
Behavioural tips to get around the natural instinct to ignore retirement needs include automating retirement savings, and staying positive.
More: Retirement savings are for retirement.

ARIA provides a forum for an informed discussion on retirement income adequacy, and other related issues, including pension and retirement coverage, and defined benefit pension plans – ARIA pensions blog, 12 Dunlop Street, Barrie, ON, L4N 1V6 – sitemanager@ariapensions

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