In the old days, according to popular allegory, you worked for a company most of your life. At retirement, that firm rewarded you with a pension, a guaranteed income for your golden years. These days, retirement planning is a bit more complicated. Fewer employers offer defined-benefit pension plans. Instead they require employees to parse byzantine literature and make life-altering choices for themselves. And more options are available than ever before.
One frequent choice nowadays is whether to make a direct contribution into a retirement account (such as a 401(k)) from each paycheck, which is sometimes matched by the employer. This amounts to transferring a current resource (cash that could be enjoyed today) into a hazy and distant figure (numbers on a piece of paper, for now). Between 1980 and 2000, the share of retirement savings that Americans contributed to such self-directed funds more than doubled, according to research published in the Proceedings of the National Academy of Sciences.