Core Insights - The article discusses the differences in retirement savings outcomes between two individuals, Nick and Judy, due to changes in the 401(k) retirement plan structure over time [8][20]. - It emphasizes the importance of proactive retirement planning and the impact of investment choices on long-term savings [49][51]. Group 1: Historical Context of Retirement Plans - After World War II, the U.S. saw a rise in corporate pension plans as companies sought to attract talent [8]. - The traditional pension model placed the burden of retirement funding entirely on employers, which became unsustainable during economic downturns in the late 1970s and early 1980s [12][15]. - The introduction of the 401(k) plan in 1981 shifted the responsibility of retirement savings from employers to employees, allowing for more personal control over investments [14][19]. Group 2: Key Changes in 401(k) Plans - A significant legislative change in 2006 allowed companies to automatically enroll employees in 401(k) plans, contrasting with the previous model where participation was voluntary [20][24]. - The default investment options also changed from low-yield money market funds to more diversified target-date funds, which have the potential for higher returns [30][33]. Group 3: Behavioral Insights - Nick's delayed enrollment and conservative investment choices led to lower retirement savings compared to Judy, who benefited from automatic enrollment and a more aggressive investment strategy [22][44]. - The article highlights the common human tendency to procrastinate on financial planning and the importance of making informed investment decisions [46][49]. Group 4: Investment Strategies - The article advocates for a diversified investment approach, such as target-date funds, which balance risk and return over time [36][52]. - It suggests that individuals should focus on long-term investment strategies rather than reacting to short-term market fluctuations [50][51].