A savings plan that kicks in with your next pay rise gets people to save far more
Save More Tomorrow, designed by Richard Thaler and Shlomo Benartzi in 2004, asks workers to commit now to raising their retirement savings rate automatically with each future pay rise, so the increase never feels like a pay cut. Because the sacrifice is deferred and automatic, far more people sign up and stick with it than when asked to raise contributions out of their current paycheck. In early trials, average savings rates nearly quadrupled over four years among the employees who opted in.