There’s a general pattern of allowing short-term financial concerns to divert attention from long-term savings needs including preparing for retirement, the Center for Retirement Research has reported.
Day to day problems examined in a study based on a poll include covering ongoing expenses, paying off debt, unemployment and lack of ready access to even $2,000. Long-term problems included lack of medical insurance, life insurance, savings for college and retirement savings, among others
“Worker financial assessments are present-minded at all ages and income levels. The relationship between financial satisfaction and particular issues varies by age much more than by income. But at all ages and income levels, financial assessments are highly correlated with day-to-day problems, with much more muted relationships to distant problems. Workers at all ages and income levels thus cannot be expected to devote much effort to addressing distant financial needs.
“This lack of attention to distant needs does not mean that people will resist efforts to nudge them in the right direction,” as evidenced by the success of auto-enrollment in employer-sponsored savings plans comparable to the TSP rates, it added.
In the TSP, only about 3 percent of those automatically enrolled opt out instead.