Why Johnny Can't Save for Retirement
Link - Money decisions are hard. It's not that we're stupid—we're just not wired properly. How brain science is changing the way we think about 401(k)s, Social Security, and the whole notion of retirement planning.
The Employee Benefit Research Institute estimates that by 2030, at current savings rates, American retirees will be $45 billion a year short of the income they need to meet basic food, housing, and medical needs.
The idea that we humans harbor conflicts within us is not new. Plato figured it out 2,400 years ago, depicting the soul as a chariot drawn by two horses, one noble and one not. Economists, though, long found it easier to depict us as rational computing machines, weighing all the options and deciding on the path of action that optimizes our well-being.
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