Plan sponsors continue to expand the number of investment options available through their retirement plans, but a new study shows that too much choice adversely affects plan participation. Analyzing some 900,000 workers in 647 retirement plans, Columbia University researcher Sheena Iyengar found the more investment choices offered, the lower the proportion of workers who participated in the plan. "[Americans] have a lot invested in the concept of choice for choice’s sake," Iyengar said. "This country was founded by people who strove to be autonomous. There seems to be an instinctive desire for it." However, she added, "If you allow people to choose their options, they almost always choose to see less. And when we don't like our choices, we seem to prefer to have no choice at all." Further examining the psychology of investor behavior, San Francisco State University professor Gary Selnow believes the reason Americans are so woefully unprepared for retirement is because humans are not naturally wired to be diligent savers. "On nearly every dimension, tucking away money today for a more secure tomorrow violates basic human inclinations," said Selnow, speaking last week at a conference for "savings behaviorists." This is because savers are being denied a tangible reward in a set time frame – a tough concession for most people to make, according to Selnow.


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