Let's see how individuals out there in the working world have done at this type of starting early to invest. So, a group of researchers sent a survey to a large sample of employees at a big firm. And having got responses from the survey, they were then permitted on an anonymous basis of course to match the survey responses to the actual savings behavior of those salaried employees. And out of every 100 employees that these researchers surveyed, they found that 68 of each 100, 68% self-reported that they weren't saving enough for retirement. They knew they weren't doing it but they didn't want to take it out of their salary each month or each year for themselves. They just had too hard a time doing it. And out of those 100 employees, 24 of them self-reported that they were going to start increasing how much they saved within at least the next couple of months. Okay, they were determined that the next couple of months that they got their paycheck they would start saving more, now that they've been reminded that they needed to do so. And guess how many of those 24 actually did that? A stunning three. We are not good at self control. We've seen this over and over. Even though many of us know that we should be saving more for retirement, if it's not done for us, we don't do it. We don't have the self-control to take that money out of our current income and put it away on a regular basis for something 20 or 30 or 40 years down the road. However, a couple of researchers have done a lot of work on exactly this issue, and they have actually got some companies to change the default on what those companies do in terms of retirement savings for their employees. So here's the way it works at some of these companies, because these companies now understand that our default is not to put money away on our own, the company actually actively says we're automatically enrolling you as you come into the company, your 401k investments are being made. 2% of your pay will be put in your 401k, unless you choose for that not to happen. Good old inertia kicks in again. Everybody knows it's a good idea, the monthly decision of whether to do it has been taken away, it's just being done. And of course, those employees are given the option not to do so. They can call a phone number to opt out of enrollment. Do they make that cool? Very, very few. Let's see some of the statistics on this. Here's a graft of outcomes of 401k participation for some firms that have been compared that in other ways very, very similar except that some of the firms are using the automatic opt in enrollment. And some of the firms are using standard enrollment, where the employees have to individually choose to have their money put in the retirement account. And as we see over the first two years of the employees being in these two different types of firms, about 80% of them stick with the automatic enrollment if that's the default, whereas with standard enrollment where employees need to choose to put money in the 401k, they start at less than fewer than 20% of those employees are doing that. Over time, more of them are starting to decide to do that, but even after two years, there are not even close. And remember what we saw earlier. The earlier you start, however small an amount it is, compound interest is going to build that for your retirement. So let's also just check, looking back after firms out there have done this automatic will enroll you right away unless you tell us not to, what were employees responses to that after they had time to get use to the idea. So here's what we found from the surveys done by these researchers. In firms with standard 401k, where there is no automatic enrollment. Two-thirds of employees say, they should save more, but we've already seen that they don't. Under automatic enrollment, only around 10% of employees actively opt-out of the automatic enrollment and that's consistent with what we saw on the last graph. Which was more than 80% of employees in automatic enroll firms are staying with the automatic enrollment. Under the automatic enrollment plans, the HR offices, the human resources officers are reporting that there are no complaints from employees about any aspect of the auto enrollment plan and in fact 97% of employees in these auto enrollment firms are positive. They're in favor of the whole process because that decision that they know is the right decision, but they don't have their own self control is being taken away from them in a way that they're happy with. Even among the workers who opt out of automatic enrollment, almost 80% of them still think it's a good idea. They must just have their own personal view about why they personally don't want to do it. At this point, even the US government is discussing adopting auto-enrollment plans as the default. Why? Because one of the biggest payments the government is making and one of the largest growing payments the government is making, are the social security payments that you get when you retire. Government would love to see more of us save more for retirement, because then the needs for the government to help fund your retirement through social programs would go down which would be a benefit for everyone. It's in the government's interest for either us to take better control or for firms to help us, give us a choice, but to help take that control for us.
