Viewing Retirement Saving as a Fresh Start

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Employers have learned over the years that understanding employee psychology is critical to getting them to save for retirement. Researchers have landed on a novel idea along those lines: explain to employees that they have an opportunity to save in a 401(k) or increase their 401(k) saving on a future date that represents a fresh start, such as a birthday or the first day of spring.

In a 2021 study in the journal Organizational Behavior and Human Decision Processes, this “fresh start framing” during an experiment increased the percentage of workers who agreed to contribute to their employer retirement plans and increased the share of pay contributed to the plans. In both cases, the increases were well in excess of 25 percent in a comparison with employees who were presented with less salient future dates.

Add this technique to a well-established one that growing numbers of employers already use with some success: automatically enrolling workers in the 401(k), and sometimes automatically increasing their contributions, which research has shown can work better than waiting for them to do it themselves. Most of the retirement plans in the study did not have any automatic features, and the fresh start dates proved another way to elicit better saving habits – voluntarily.

The option to delay a commitment to save is based on an assumption that people are more willing to make a change that involves sacrifice if it can be postponed – smokers often try to quit this way. One theory for using a fresh start date is that it imbues a feeling of optimism, giving employees permission to set aside past failures.

In a mailing, some 6,000 employees at four universities were given the option of either signing up for the retirement plan or increasing their contributions to it immediately or in the future. Various future dates were tested out in the experiment: two, three, four, five or six months; a few holidays; or a birthday or the first day of spring. If the employees agreed to sign up or save more, they filled out a stamped, addressed postcard confirming the choice.

Employees presented with either the birthday or spring option were more likely to agree than the employees who were asked to do so after an equivalent time delay such as two months.

One result that surprised the researchers was New Year’s Day, which they’d expected to elicit a desire to save. But that test didn’t get a strong response, perhaps because the day has become a cliché for fresh starts – in other words, it no longer feels very fresh.

The researchers concluded that their experiment demonstrates the benefits of linking future savings with making a fresh start.

To read the study on which the journal article is based, see “Save More Later? The Effect of the Option to Choose Delayed Savings Rate Increases on Retirement Wealth,” authored by John Beshears, Hengchen Dai, Katherine Milkman, and Shlomo Benartzi.

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

Phil Eschtruth Harrison

Another possible reason the New Year wasn’t popular is that many people take on additional debt over the holidays and will be needing more of their net pay to cover bills in January.

geoffrey hewitt

Most people do not understand how to invest money properly and do not know terms such as: present value of money; ROI; the stock market; industry averages on returns; historical returns; value of long term investing; and a buy and hold strategy. These could all be taught as a requirement at both the high school and college levels instead of just social courses which will do zero when you need income at retirement. There are trillions of dollars here and thus less dependency on the Federal government, which is not what they want.

    Ken Pidcock

    Helaine Olen has written a good bit about financial literacy promotion. Fortunately, your “social courses” are likely equally as effective.


When I first started saving – when I was 27y/o – I never considered any of this. (Nor did I know anything about the stock market, historical returns, buy and hold, etc.) I had heard about the concept of “pay yourself first;” it made sense to me, so I did.

I never considered whether it was my birthday or the first day of the year. Perhaps it was aligned with the start of a new job, I don’t recall. I do recall (as best as I recall) that I always max’d out my 401(k) contribution at work.

It was simply something I did because the data clearly indicated it was in my own self-interest. Perhaps it was aligned with that “self”-ishness of the decision, again, I don’t recall. (I have heard it said that if you want to convince someone to take action, you should appeal to their prejudices, rather than to their logic.)

Today is the favorable time; tomorrow may be too late.

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