We all procrastinate sometimes – some more skillfully than others. In Tim Urban’s talk ‘Inside the mind of a master procrastinator’ he explains how the ‘instant gratification monkey’ overrides our ‘rational decision-maker,’ making us chase what’s ‘easy’ and ‘fun’ instead of what’s necessary. Retirement planning is neither easy nor fun, so it’s easy to see why so many of us may disengage from planning decisions far longer than we should – until it’s often too late. This disengagement carries real human costs. Consider that 70% of retirees wish they had started saving earlier, while 51% of Americans worry they’ll run out of money in retirement. These aren’t just statistics – they represent millions of Americans in financial anxiety. In fact, many rank retirement alongside life’s most stressful events, including job loss and divorce. The challenge, then, is clear: how might we help people overcome the procrastination trap and engage with critical planning choices well in time for them to help secure a comfortable retirement?
How the power of AI and behavioral economics unlocks opportunity
This blog leverages analysis on emerging market trends, insights on evolving customer behavior and in-depth interviews with 11 senior executives from leading incumbent and challenger retirement and record keeping firms. Our research reveals that if, through a better experience, more people participated in their retirement plans, and contributed more to these plans, this could unlock an incremental $405B in assets under administration (AUA) within the sector over a 10-year horizon in the US. The key to capturing this opportunity and boosting engagement lies in reimagining the participant experience through the combinatorial power of AI and behavioral economics. While AI has dominated headlines with its potential to create efficiencies and cost savings, we believe its true power comes to the fore when it’s merged with behavioral science principles to create experiences that don’t just inform participants but also make them think and drive action. Behavioral economics provides insightful principles around how people make decisions.
