Worker and Spousal Responses to Automatic Enrollment

85 Pages Posted: 4 Apr 2022 Last revised: 27 Aug 2023

See all articles by Elena Derby

Elena Derby

Government of the United States of America - Joint Committee on Taxation

Kathleen Mackie

Joint Committee on Taxation

Jacob Mortenson

Joint Committee on Taxation, US Congress

Date Written: May 9, 2023

Abstract

This paper provides comprehensive estimates of the savings effects of automatically enrolling employees in retirement plans. We use administrative U.S. tax data to measure the retirement savings of employees (and their spouses) at 745 firms. Consistent with prior findings, we estimate that automatic enrollment increases participation in the year after hire by 86 percent and retirement plan contributions by 51 percent. However, we also find employees are 33 percent more likely to take a non-rollover withdrawal, driven by employees who separate from their employer. Incorporating this offsetting behavior, we estimate net savings increase by 37 percent on average in the short run. Spouses do not alter their saving behavior. Over a longer time-horizon, the net savings effect for employees still employed by the firm declines for high-wage employees and increases for low-wage employees. However, the net savings effect for employees who have separated from the firm declines substantially.

Keywords: Retirement saving, automatic enrollment, nudge

JEL Classification: H24, H31, D14, G51

Suggested Citation

Derby, Elena and Mackie, Kathleen and Mortenson, Jacob, Worker and Spousal Responses to Automatic Enrollment (May 9, 2023). Journal of Public Economics, Vol. 223, No. 104910, 2023, Available at SSRN: https://ssrn.com/abstract=4053680 or http://dx.doi.org/10.2139/ssrn.4053680

Elena Derby (Contact Author)

Government of the United States of America - Joint Committee on Taxation ( email )

441 2nd st SW
Washington, DC 20002
United States

Kathleen Mackie

Joint Committee on Taxation ( email )

Room 1625 Longworth House Office Building
Washington, DC 20515
United States

Jacob Mortenson

Joint Committee on Taxation, US Congress ( email )

502 Ford House Office Building
Washington, DC 20515
United States

HOME PAGE: http://www.jacobmortenson.com

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