Peer pressure can be a good thing—if your workout buddy’s impressive speed boosts you to push a little harder, or if your boyfriend’s healthy eating encourages you to eschew the burger and fries.
But a new study shows that when it comes to saving for retirement, peer pressure may not work so well.
Too Much Information?
A group of researchers led by James Choi, a professor at Yale School of Management studied how people enrolled in retirement plans.
When they told potential savers about how much their peers were contributing, they had a surprising result: They found that participants were less likely to sign up for a 401(k).
When they encouraged enrollment without giving the extra contribution info, they discovered that people were more likely to pony up for the company’s retirement plan.
Encouragement or Discouragement
According to the study’s authors, there are several reasons why we may get derailed when hearing about other people’s money matters:
- Feeling disheartened: Researchers found that learning how much peers were saving led some people to become discouraged at being so far behind, making them less likely to be motivated to increase their own savings rates.
- Feeling like the goal is unachievable: When people learned that others their own age had reached savings goals that seemed difficult to them, they may have believed they could never catch up—so they may have given up.
If you find yourself getting overwhelmed at even the thought of retirement planning, you aren’t alone. The good news is that you don’t have to stay overwhelmed.
To get into the game, try these science-backed ways to sock away more for your nest egg.
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