Default Options and Retirement Saving Dynamics

Using data from over 100 US retirement plans and a representative UK panel, I document the impact of auto-enrollment (AE) on retirement savings at different horizons. I replicate the impact of AE on participation and contributions in the short run (at 12 months), but I show that these gains are attenuated over the medium run (at 36 months). At this longer horizon, the average savings increases are modest, though AE significantly lowers inequality in savings. To assess AE’s lifetime impact, I estimate a life cycle consumption-savings model that can fit the observed patterns with a switching cost of approximately 250, smaller than previous estimates. (JEL D15, G51, J26, J32)