Wharton Pension Research Council Working Papers

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Working Paper

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This paper summarizes the empirical evidence on how defaults impact retirement savings outcomes. After outlining the salient features of the various sources of retirement income in the U.S., the paper presents the empirical evidence on how defaults impact retirement savings outcomes at all stages of the savings lifecycle, including savings plan participation, savings rates, asset allocation, and post-retirement savings distributions. The paper then discusses why defaults have such a tremendous impact on savings outcomes. The paper concludes with a discussion of the role of public policy towards retirement saving when defaults matter.


The published version of this Working Paper may be found in the 2008 publication: Lessons from Pension Reform in the Americas.

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Copyright 2006 © Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.


We thank Hewitt Associates for their help in providing the data analyzed in this and several previous papers that form the foundation for the arguments advanced in this paper. We are particularly grateful to Lori Lucas and Yan Xu, two of our many contacts at Hewitt Associates. We acknowledge individual and collective financial support from the National Institute on Aging (grants R01-AG021650 and T32-AG00186) and the U.S. Social Security Administration (grant #10-P-98363-1 to the National Bureau of Economic Research as part of the SSA Retirement Research Consortium). The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of NIA, SSA, any other agency of the U.S. Federal Government, or the NBER. Laibson also acknowledges financial support from the Sloan Foundation.

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Date Posted: 28 August 2019