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Workers Save More For Retirement When Nudged by Employers

Employers can have an effect on the savings and retirement rates of their employees more than offering 401(k) savings plans. A working paper by the National Bureau of Economic Research found that even though companies leave retirement savings plans to firms like Prudential and Vanguard, it is important for them to remind workers to periodically reassess their retirement security and savings rates. The study focused on an experiment in the state of North Carolina's Retirement Division. It found that email "nudges" to older public employees made them more likely to change their contributions, increasing them at a rate of 2.8 percent in the short-term compared to 1.8 percent for those who did not receive emails. "Encouraging workers to be prepared for retirement is certainly in a company's interest," said Robert Clark, a professor of economics and management at North Carolina State University and one of the study's authors. "An employer obviously wants satisfied workers as well as satisfied retirees."