2025 Retirement Planning

• Simpler retirement account statements increased savings when firms had strong returns

• But for poorly performing firms, simplification actually reduced contributions

• Findings challenge assumptions of policy experts and have major implications for global savings policy

A new academic study reveals that simplifying retirement account statements can encourage people to save more—but only if they’re invested with a well-performing firm. When consumers saw clearer, easier-to-read statements from firms with poor returns, they actually contributed less.

The research, based on two large-scale field experiments involving more than 127,000 customers in Mexico, challenges the widely held belief that simpler communication always leads to better financial outcomes.

While simplification made key information easier to understand and remember, it also amplified consumers’ focus on whether their retirement provider was performing well—leading many to reduce contributions if the firm was ranked low.

The study was recently publishes in the Journal of Consumer Research.

A surprising backfire for low-ranked firms

The study, conducted in partnership with two Mexican retirement firms, found that simplified statements led to increased voluntary savings among customers of the higher-ranked firm, but reduced savings among customers of the lower-ranked one.

This result caught both researchers and policy experts off guard. In surveys before the experiment, none of the 74 policymakers and marketing experts polled predicted that simplification could lead to a negative effect. Over 70% assumed that simpler statements would boost savings across the board.

Even a follow-up survey of 200 everyday Mexican citizens showed most people believed simplified forms would improve savings—regardless of firm performance.

Why simplification had mixed results

The researchers suggest the key lies in a concept called processing fluency—how easily people can absorb information. When people better understand their account statements, they’re more likely to act on what they learn.

That can be good news if the information is positive—such as a high-performing fund—but bad news if it highlights poor returns. In those cases, the study suggests, simplification may unintentionally discourage people from saving altogether.

Laboratory experiments confirmed that people who saw simplified statements remembered their firm’s rank more accurately—and that this clarity amplified their response, either positively or negatively.

A path forward: Help people switch

To counter the negative effects for customers in poorly performing funds, the researchers tested a new approach: simplifying the process for switching to a better provider. When customers received clearer instructions on how to switch firms, those with low-ranked providers were significantly more likely to move their savings.

This finding points to an important policy opportunity. By not only simplifying statements but also making switching options more transparent and accessible, policymakers could help boost retirement savings even for those in underperforming funds.

Implications for global retirement policy

With millions worldwide facing retirement savings gaps, governments and financial institutions have increasingly embraced "nudge" strategies to encourage better financial behavior. Simplifying forms has become the most common intervention used in nearly 36% of policy experiments worldwide, according to a recent meta-analysis.

But this new research suggests that simplification alone isn’t a silver bullet. Instead, it must be paired with strategies that help people act on the information they understand—especially when that information reveals problems with their current financial provider.

The study adds to a growing body of behavioral economics research that urges policymakers to look beyond good intentions and understand how real people react to clearer information.

As the researchers conclude, “Improving the ease of processing information can change behavior—but whether that change is helpful or harmful depends on the message the information is sending."

• Health care in retirement can cost nearly $200,000 — but many Americans underestimate or overlook this major expense.

• Saving in a Health Savings Account (HSA) and choosing the right Medicare plan can help reduce out-of-pocket costs.

• No matter your age, it’s never too early (or too late) to plan — every generation can take steps now to protect their future finances.

When most people think about retirement, they imagine travel, hobbies, and finally having time to relax. But there’s one major expense that often catches retirees off guard: health care. From doctor visits and prescriptions to Medicare premiums and long-term care, the costs can add up quickly — and many Americans aren't prepared.

To help break down what future retirees need to know, Whitney Stidom, vice president of Medicare Enablement at eHealth, spoke with ConsumerAffairs about how different generations can start planning now, practical steps you can take to protect your future finances, and more. 

Set realistic expectations

When it comes to planning for retirement costs, Stidom recommends having realistic expectations about health care costs.  

“In retirement, everyone eventually needs health care, and health care is expensive,” she said. “Our recent survey found that 76% of Americans underestimate or don’t know the average cost of health care in retirement, which amounts to nearly $200,000 for the average retiree.” 

Money-saving tips

Stidom shared her top three tips for saving money for health care costs in retirement: 

1. Pursue healthy habits. Get exercise, avoid unhealthy food, don’t smoke. Ask your doctor for advice based on your health and family history. The healthier your lifestyle, the better chance you have of avoiding the need for medical intervention.

2. Save money specifically for your retirement health care costs. If you’re still in the workforce, consider a Health Savings Account (HSA). In 2025 alone, you can save $4,300 (or $8,550 for a family) on a tax-free basis in an HSA. The money is yours to keep and can be invested to potentially grow in value over time. You can build up a health care expense nest egg in an HSA and use it in retirement to help cover deductibles, copayments, dental and vision care, or even massage therapy if medically necessary.  

3. Make sure you’re in the right Medicare plan for your needs and budget. Whether you’re enrolling in Medicare for the first time or reviewing your plan choices during the fall Annual Enrollment Period (AEP), it’s important to understand your options. Medicare Advantage plans may provide coverage for many services not included in Original Medicare, such as prescriptions, dental, vision, hearing, and more. It can pay to shop around. Americans have access to an average of over 40 Medicare Advantage plans in their local area, and beneficiaries who comparison shop can potentially save an average of over $1,100 per year on medical costs. 

The generational breakdown

Regardless of what generation you’re in, it’s important to start preparing for retirement. Stidom broke down her best advice for consumers trying to make the most of their money. 

• Retired: If you’re already retired, the best Medicare plan for you last year isn’t necessarily going to be the best plan for you in the new year. Your personal health and medical needs can change from one year to another, and so can your personal finances. If you’re enrolled in a Medicare Advantage plan or a Part D drug plan, your benefits and costs under that plan can also change from one year to another. 

• Boomers: For Boomers who are not yet retired, if you’re healthy and rarely visit the doctor, consider a plan with a Health Savings Account (HSA). If you’re enrolled in an HSA-eligible plan and age 55 or older, you can make an additional $1,000 contribution to your account each year to help you stockpile tax-advantaged funds for future health care costs. 

• Gen X: This group needs to think beyond their 401(k)s. Health care costs in retirement typically aren’t on the radar for most Gen Xers yet. They should consider HSAs as well, and start educating themselves about what Medicare is, how it works, what it covers, and what it doesn’t. Some Gen Xers have helped their parents through these questions, but it may soon be time to start applying those lessons to yourself. Gen Xers might also take stock of their personal health and lifestyle and think about where they’re headed 10 or 20 years from now, as now is the time to make healthier lifestyle decisions. 

• Millennials and Gen Zers: They may not be thinking much about retirement yet, or about health care costs. Since they’re younger and typically healthier, HSAs can be an especially good option for them. If you’re 30 years old today and have an employer that contributes to your HSA, you could potentially save tens of thousands of dollars – in part through the power of compound interest – for health care costs by the time you are retirement age.

Millions of Americans started 2025 with rising credit card debt, living paycheck-to-paycheck and falling further behind their financial goals.

Charlotte, N.C., financial advisor Marcus Sturdivant Sr., says the start of a new year is a good time to improve your financial literacy, suggesting that improved money skills affect not just your bank account but your entire life.

“I’m a financial advisor by trade so I’ve seen the results in other people’s lives,” Sturdivant told ConsumerAffairs. “When we sit down and have a conversation we see that many people don’t understand the value of owning a home, of credit, and how to use credit and debt.”

So what does he mean? Sturdivant says much of the stress in family life is caused by the lack of proper money management and is one of the biggest causes of divorce.

“People can be married 20 or 30 years and not really understand each other’s views of money, or where they want to get to by retirement,” he said. 

For young people, having a good financial literacy education is important when dating. For example, if you have a good credit score you probably want to avoid getting involved with someone who has a poor score.

Happier, more stable life

Sturdivant says someone with a strong financial literacy grasp will likely have a happier, more stable life. They will have fewer worries about debt because they will pay their credit card balance in full each month. Someone without this knowledge may be quickly burdened with unsustainable debt.

“Einstein stated that compounding interest is the strongest force in nature,” Sturdivant said. “That blade cuts both ways, if people are saving and compounding those gains, it is beautiful. On the flip side, paying minimum balances or not paying at all will have detrimental consequences on the growing balance.”

Sturdivant has worked with a Charlotte-area non-profit, offering a free financial literacy course to help people get a grasp of their finances, sometimes turning their lives around. He says it just takes that initial step.

“People fear what they do not understand and finances can seem daunting and only for the affluent,” he said. “The first step in mindset is realizing everyone can grow in their financial literacy and start to grow their returns.”