People saving for retirement during their working years often do so, at least in part, by taking advantage of employer-sponsored 401(k) plans.
These contributions are especially lucrative when a worker’s company matches them up to a predetermined income percentage, essentially giving the employee a 100% return on at least part of their investment.
Bestselling personal finance author and motivational speaker Tony Robbins has a warning for Americans about Social Security benefits, and offers a surprising explanation about why many people are having difficulty setting aside a substantial sum of money for 401(k) plan contributions.
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Robbins has said that failing to plan for retirement and assuming Social Security benefits will be of sufficient amounts to cover retirement expenses is asking for financial trouble.
In 2025, the average monthly Social Security paycheck is about $1,900, which works out to around $23,000 annually. That number is only slightly above the federal poverty level of $21,150 for a household of two.
That being the case, a significant amount of one’s income while working obviously needs to be saved and available to spend after one retires.
Related: Tony Robbins warns U.S. workers on Social Security, retirement fact
Robbins acknowledges that 401(k)s can be a great financial tool to assist people in their efforts to save and invest for retirement. But he notes there is a danger in transferring the burden of retirement savings from the employer — as with pensions that were much more common in previous years — to the employee.
Contributing to 401(k)s, and determining what percentage of income to invest in them, is a voluntary process. A major worry for many is that they may be setting aside too little, or none at all — and that could lead to financial catastrophe.
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Tony Robbins, considering Social Security’s shortcomings, sees surprising reason 401(k)s fail
In his book, Money Master the Game, Robbins examines the surprising psychology behind saving for the future in an effort to understand why some people — even those with the means — are not putting enough money into their 401(k)s.
“Is there something holding you back? What’s really going on?” he asks. “Could it be that you’re not systematically saving money because it feels like a sacrifice — a loss — instead of a gift to yourself today and in the future?”
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Robbins discussed the behavior of retirement planning with UCLA’s Shlomo Benartzi.
“The problem is people feel like the future is not real,” Benartzi said, “So it’s hard to save for the future.”
Previously, Benartzi had taken his academic interest in the subject and combined it with the like-minded studies of the University of Chicago’s Richard Thaler.
Related: Tony Robbins warns Americans on Roth IRA, 401(k) obvious problem
Tony Robbins investigates a surprising solution for retirement and 401(k) savings
Robbins describes how Benartzi and Thaler devised a solution to help people save money for retirement. They called it Save More Tomorrow and it was based on one major premise: “If it hurts too much to save more money now — just wait until your next pay raise.”
The first challenge Benartzi explained to Robbins was that it was necessary to address the challenge of immediate gratification, something scientists call “present bias.”
“As a species, we’re not only wired to choose today over tomorrow, but also we hate to feel like we’re losing out on something,” Benartzi said.
Robbins wrote that Benartzi told him about a study in which monkeys were given an apple, while scientists observed their enthusiastic responses. Another group of monkeys were given two apples and also exhibited signs of excitement.
Then, the monkeys that were given two apples each had one taken away, and they became angry.
“The bottom line is, if we feel like we’re losing something, we avoid it; we won’t do it,” Robbins wrote. “That’s why so many people don’t save and invest. Saving sounds like you’re giving something up, you’re losing something today. But you’re not. It’s giving yourself a gift today of peace of mind, of certainty, or the large fortune in your future.”
And that is where the Save More Tomorrow solution found an application to real life.
“Save More Tomorrow invites employees to save more maybe next year — sometime in the future,” Benartzi said.
First, an employee agrees to save a small amount now, even as little as 3% of their income. Then, they agree to commit to saving more at a point in the future when they get a raise. And with each pay increase, the percentage increase becomes larger.
“You wouldn’t feel it as a loss, because you never had it in the first place,” Robbins wrote.
The researchers explained that they had tested this theory on a company in the Midwest, where the employees said they couldn’t afford to save any of their income. Even so, the scientists persuaded them to allow their employer to divert 3% of their salaries into a retirement account and then add 3% every time they got a pay raise.
“After just five years and three pay raises, those employees who thought they couldn’t afford to save were setting aside just under a whopping 14% of their paychecks,” Robbins wrote. “And 65% of them were actually saving an average of 19% of their salaries.”
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