Richard Thaler

Certainly in my parents' generation, pensions were like Social Security.

They just depended on how much you made.

You had no choices to make.

And when they were getting started, lots of people weren't even joining.

Now, this is really dumb because at most companies, there's a match.

So they'll match your saving dollar for dollar, even 50 cents on the dollar.

If you turn that down, that's throwing money away.

So how can we help?

Well, it used to be that at almost all companies to join, you had to fill out some form and say, yes, I want to join and I want to invest my money in the following funds.

Filling out one form isn't really that big of a deal, but it was enough of a deal that at one company, only half the workers had joined within their first year of employment, costing themselves thousands of dollars.

What did we suggest?

Let's change the default.

So we'll make it that unless you fill out a form, we're going to enroll you at a certain saving rate and into a certain fund.

One of my then colleagues, Bridget Madrian, studied a firm that made this switch and enrollment within the first year went from 50% to 90% just by making it automatic.

That left a problem that the default saving rate was too low.

So another one of my students, and I came up with a plan to fix that, that we called Save More Tomorrow.

What we offered people was you can increase your saving rate next year when you get a raise.

People say, oh, next year, fine.

And it's from the raise, right?

So there's no loss.