Here’s how “save more tomorrow” works. When new employees join a company, in addition to the regular decisions they are asked to make about what percentage of their paycheck to invest in their company’s retirement plan, they are also asked what percentage of their future salary raises they would be willing to invest in the retirement plan. It is difficult to sacrifice consumption today for saving in the distant future, but it is psychologically easier to sacrifice consumption in the future, and even easier to give up a percentage of a salary increase that one does not yet have.
