A 2006 law designed to boost employees retirementsavings is

A 2006 law designed to boost employees\' retirement-savings is having the opposite effect for some people. Read 401(k) Law Suppresses Saving for Retirement by: Anne Tergesen (pdf).

1) Is it rational for a person to not increase a savings rate over time that was initially set too low?

2) Why do people succumb to this irrational behavior?

https://bbaddins.schoolcraft.edu/addins/econ202v2/docs/mod01401k.pdf

Solution

1. Yes

We know that saving means that a income that will not spend. Sometimes peoples are not save much for his current income.

2.

A person is not saving at his current level income. The rational consumer is not save at the current level of interest. Here i discussed some reason for the people are saved less:

1. Getting lower rates of interest.

2. Greatest bank fees for the saving account

3. Most of the young generation think that they can live today and forgetting about the future

4. Lower rates of salary

5. aggressive lending will increase the long term debts