No thanks, I don’t need free money

File the title of this post under “things you’ll nev­er hear me say.”

I’d sus­pect most of us would­n’t ever say that… but appar­ent­ly one in four act it:

On aver­age, employ­ees who fall short leave $1,336—or 2.4% of their salaries—on the table

(Here’s a link to the full report)

Since most of us would­n’t turn away free mon­ey, why do you think peo­ple don’t par­tic­i­pate?

Believe they don’t par­tic­i­pate because they need the mon­ey today to pay bills, and can’t afford to put it away even with the ben­e­fits of deferred tax­es & match­ing is a cop out. Sure, some peo­ple need the mon­ey today.

I bet the real prob­lem is deep­er and that “need­ing the mon­ey” is an excuse. In fact, they don’t know much about invest­ing, it’s demo­ti­vat­ing to watch what put away lose val­ue, and the bro­ker­ages don’t help by help­ing peo­ple under­stand how much they’ve accu­mu­lat­ed “for free” (as a result of match­ing, or tax defer­rals).

Until finan­cial prod­ucts address this moti­va­tion issue, this bar­ri­er to adop­tion, things won’t change. Tricks like mak­ing 401(k) par­tic­i­pa­tion the default will help, but only at the mar­gins.

The lack of trust with the bro­ker­ages and lack of knowl­edge about invest­ing & finance is the real bar­ri­er.