Keywords
automatic enrollment, financial distress, retirement plan
Abstract
Does automatic enrollment into a retirement plan increase financial distress due to increased borrowing outside the plan? We study a natural experiment created when the U.S. Army began automatically enrolling newly hired civilian employees into the Thrift Savings Plan. Four years after hire, automatic enrollmentincreases cumulative contributions to the plan by 4.1% of annual salary, but we find little evidence ofincreased financial distress. Automatic enrollment causes no significant change in credit scores, debt balances excluding auto debt and first mortgages, or adverse credit outcomes, with the possible exception of increasedfirst-mortgage balances in foreclosure.
Original Publication Citation
“Borrowing to Save? The Impact of Automatic Enrollment on Debt.” 2022. Journal of Finance 77(1) 403-447 (with John Beshears, James J. Choi, David Laibson and William Skimmyhorn). https://doi.org/10.1111/jofi.13069
BYU ScholarsArchive Citation
Beshears, John; Choi, James J.; Laibson, David; Madrian, Brigitte C.; and Skimmyhorn, William L., "Borrowing to Save? The Impact of Automatic Enrollment on Debt" (2022). Faculty Publications. 8938.
https://scholarsarchive.byu.edu/facpub/8938
Document Type
Peer-Reviewed Article
Publication Date
2022
Publisher
Journal of Finance
Language
English
College
Marriott School of Business
Department
Finance
Copyright Status
© 2021 the American Finance Association
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