Thursday, December 6, 2012

Another Sunstein Nudge?

Joel Weyrick emails:
My wife will have to fill out forms to opt out of a 401k next year (and possibly every year). This doesn't seem like something her employer would dream up. Is it another nudge?
Sounds like it. And it is a further signal to be very cautious about putting money in a government designed savings box. If they are making it difficult for you to opt out, it is a signal they want the money where they can keep an eye on it---for future taxation.

It may still make sense for those close to retirement to use a 401k, but the farther you are from retirement, the more likely you will eventually be taxed while the funds are still sitting in the 401k. Beware.


  1. As far back as Spring 2007, when I got my first job after college, the consulting company I worked for required me to put in writing my opt out request for their 401k program.

    I don't believe this is a completely new development (though it may very well be a new govt regulation vs my company's invented policy at the time).

  2. Already happening in other "civilized" countries.

    1. Are those the ones that are melting down now due to over "civilization" perhaps? LMAO

  3. I was fortunate enough to be able do a 401k rollover back in 06' into gold...but I decided to take a major hit for the same fear outlined above and take it all physical over the last few years despite the tax hits.

  4. This is not government based, but yes, it is very much Nudge-type thinking. Tons of research shows that 401k participants have huge inertia. Many responsible employers are worried in an era with no traditional pension and failing Social Security, their employees will not be able to retire. By defaulting people into plans, paying a match, and defaulting investment into target date funds, employers are getting people on a savings path, while still preserving an opt-out for employees that want to self-direct.

    I'd prefer a better educated society that has individuals taking responsibility for saving, but it looks like this will only happen after everything fails


  5. Unless your using a Roth 401(k) it is a HUGE DUH!!!!!!!! that your going to pay taxes later.

  6. Studies have shown that nearly half again as many people will participate in a company sponsored savings or insurance programs if they are opt-out instead of opt-in. People are basically stupid. They rely on the Social Security Ponzi Scheme for their retirement, and this is just a way to help them exercise a little personal responsibility. As long as they are able to opt out, and preserve their stupidity for posterity, I see value in the policy. BTW, unless it is under a mattress somewhere, the Feds know where you keep every dime right now anyway.

  7. If you trying to look stupid here, great success!, veeeery nice!

  8. Rapacious credit expansion and the resulting price increases and boom/bust cycles make saving and investing a more precarious proposition than ever. The level of US deficit spending and debt make it doubtful that SS will provide any meaningful support for most people. Under these conditions, people with "excessively large" 401K or other liquid, visible savings are the next political target -- why do you think the US govt now requires disclosure of foreign bank accounts? In this environment, if you are confident about the safety of any savings of meaningful size, you are simply in denial.