Some of you may have heard that this year’s Nobel prize for Economics went to Richard Thaler…or some of you might be wondering, who the heck is Richard Thaler??

He won for his contributions to Behavioral Economics, showing how human traits affect supposedly rational markets. He co-wrote a great book called, “Nudge“. The reason I bring him up is he’s partly responsible for helping convince Congress to overall the 401(k) a decade ago. Congress use his theory in 2006, “Save more for Tomorrow.”  His big take away, instead of Companies asking their employees to sign up for 401(k), he encouraged employers to automatically sign-up employees for their 401(k)s. They could then choose to opt out. That was the nudge to get people to save for their futures. How big of an impact did this auto-enrollment have?  One 2015 Vanguard paper suggested that the practice more than doubles plan participation rates to more than 91% of workers from 42%.

Continue reading “401(k) – Changes and Regular or ROTH”