The science behind why you don’t save (and what to do about it)

Psychological obstacles prevent us from making the right choices.

by John Beshears, Katherine Milkman, Laura Burke, & Alison Fahey, TIME Money

By now, you’ve probably heard the news that nearly half of Americans can’t come up with just $400 to cover an emergency expense without selling something or borrowing money. This fact is even more alarming when combined with data on long-term savings—nearly half of people age 55 and older have no retirement savings at all, other than Social Security.

The short- and long-term savings crisis isn’t only an issue facing low-income Americans—it is also a reality for many middle class households. Needless to say, too many of us are living on the edge.

So what is the problem? Why don’t we save?

It’s not, as you might guess, just because many Americans are too poor to set money aside. Certainly, a lack of resources makes it hard (and in some cases, impossible) to save, but research shows that for many of us, the problem lies elsewhere.

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