Working Americans, by their own admission, struggle to save for retirement. Only 36 percent say they’re banking enough.

Stanford economist Gopi Shah Goda, through her analyses of 401(k)s and other employer-sponsored retirement plans, has been unearthing roots of inertia in saving decisions and shining a light on what can be done about it.

In a new working paper published recently by the National Bureau of Economic Research, Goda and her coauthors focus on a key question: Do people avoid making saving decisions because of who they are — maybe they are prone to procrastinate or lack financial mastery — or does the inertia have something to do with how retirement plans are structured and the choices they ask people to make?

The answer, according to Goda’s latest research, is both. She finds that a combination of individual traits and the choices people are given when they contribute to a plan influence how they save.

For example, she shows that workers with a deeper understanding of personal finance are likely to save more and be more proactive about participating in the plan when enrollment in an employer-sponsored plan is optional. This happens even for people who tend to procrastinate and would otherwise put off making a decision about their retirement savings.

By contrast, Goda finds no evidence that financial literacy is associated with saving decisions among employees under a plan that automatically enrolls its workers. Here instead, procrastination takes over: Employees who tend to postpone decisions make lower contributions under automatic enrollment. They may conclude the automatic contribution amount under the plan is “good enough,” setting them up to save less overall.

“This dispels the notion that people are either passive or active savers because of their fixed traits,” says Goda, a senior fellow and deputy director at SIEPR. “I might be an active saver in an opt-in retirement plan, but a passive saver in an auto-enrollment plan.”

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