The essence of the program is straightforward: people commit in advance to allocating a portion of their future salary increases toward retirement savings. In this paper, we propose such a prescriptive savings program, called Save More Tomorrow™ (hereafter, the SMarT program).
Behavioral explanations for this behavior stress bounded rationality and self‐control and suggest that at least some of the low‐saving households are making a mistake and would welcome aid in making decisions about their saving. The employees who fail to join the plan or who participate at a very low level appear to be saving at less than the predicted life cycle savings rates. As firms switch from defined‐benefit plans to defined‐contribution plans, employees bear more responsibility for making decisions about how much to save.
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