Savings help families secure a comfortable retirement, weather financial emergencies, make major purchases, and decrease stress. Unfortunately, nearly 57 million workers in the U.S. do not have access to an employer-based retirement plan, including over 63% of Hispanic workers, 53% of Black workers, 45% of Asian American workers, and 41% of white workers. Even workers with access to a retirement plan might not use one: over 20% of full-time workers and about 60% of part-time workers that have access to a retirement account don’t participate.

What’s worse, those with access who choose to participate might still not have sufficient savings by the time they retire: over 22% of retirement contributions made by people 50 or younger are withdrawn from accounts each year. People often withdraw retirement funds early to address immediate needs, particularly when they don’t have short-term savings. A recent study found that 45% of households couldn’t pay an unexpected $400 expense without dipping into their retirement accounts; this number jumps to 65.2% for Black households, compared to only 46.7% for white households.

To build savings and promote financial equity, families must have access to a retirement account, choose to save, and limit their pre-retirement withdrawals. Congressional action is needed to ensure that all workers have access to retirement accounts. Additionally, policymakers should leverage the principles of behavioral science included below so that more families with the ability to save choose to do so and reduce their pre-retirement withdrawals.

1. Automaticity and Defaults Increase Participation in Savings

A key insight from behavioral science is that we, as humans, can be lazy. We have limited cognitive energy yet face thousands of choices every day; to get by, we minimize active effort and utilize heuristics and other cognitive shortcuts wherever we can. Therefore, we might put off actions we know we should do because they are tedious or overwhelming. We are more likely to engage in behaviors that are easy and simple. Automatic processes eliminate the required effort and make engagement easy.

2. Financial Incentives Can Motivate Pro-Saving Behavior

Financial rewards, even small micro-incentives, can have outsized impacts on behavior.

3. Trusting People Promotes Self-Efficacy while Saving

People need to feel empowered to make their own choices. When people feel forced or coerced, they may avoid engaging in certain behaviors, even behaviors in their best interest.

Read the full article about helping families build savings by Kelli Garcia and Amanda Kaplan at ideas42.