This post is by Jeff Carter from Points and Figures
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Every day in my inbox, I get the American Enterprise Institute daily email. Sometimes there is some interesting stuff in it. Today, an article caught my eye. Should the poor save for retirement?
If you read the book Nudge by Richard Thaler, he talks about ways to “nudge” people to save. Opt-in versus opt out. There are companies cropping up that help the poor, or anyone takes spare change and put them in interest-bearing or stock accounts to grow. There is no doubt that people misunderstand how compound interest and compounding works. But, the real question is if I can use the money today to make myself better off should I do that versus saving it for tomorrow?
Remember, we are talking about people that don’t have much to start with.
Economist Andrew Biggs ran a study. He found that “for very earners, roughly the poorest quintile of the earning distribution, little savings are necessary on top of Social Security. For earners above that level saving requirements increase, but are likely achievable so long as an earner has access to a retirement plan and participates in it.”
All this is really interesting to me and it is one reason I really like being an investor in Holberg Financial. They work with human resource people at companies to provide financial health benefits to employees. If you are an HR person, you really ought to give them a call. Companies that are using Holberg have found that their employees are significantly more productive.
A lot of wealth management companies offer this service for “free”. But, they have an agenda. They want you to buy their products. Holberg is like Switzerland. They don’t care what product you buy as long as the behavior of the employee changes for the positive. They are getting real results. It’s impressive.