How to Use Commitment Devices:- • Employer-Sponsored Plans:

How to Use Commitment Devices:- • Employer-Sponsored Plans: Use employer-sponsored retirement plans, such as 401(k)s, if your employer offers a matching contribution. Automatic payroll deductions ensure saving for retirement will be a priority. • Automatic escalation: Many retirement plans provide the option for participants to automatically increase their contribution rate every year, so that the retirement savings grow over time without requiring conscious effort. b. Framing Effects: Reframing Retirement Decisions The way the retirement options or information are presented can greatly influence decision-making. In behavioral finance, this is known as the framing effect. For example, people are more likely to choose to save more when the choice is framed as \"saving 15% of your income\" rather than \"spending 85% of your income.\" How to Use Framing to Your Advantage:- • Positive Framing Frame retirement savings decisions in ways that highlight the benefits of saving. For example, focus on how much you will accumulate over time or what kind of financial freedom you\'ll have in retirement, rather than the sacrifices you may have to make today.