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June 24, 2024 at 03:01 PM
Participants in 401(k) plans saved at historic rates in 2023, with a record-high number also increasing their savings rate, according to Vanguard’s annual report on the retirement savings behaviors of its nearly 5 million participants, released Monday.
When combined with employer contributions, the average participant total savings rate kept pace with the 11.7% all-time high reached in 2022.
“Smart plan design features are removing barriers to saving,” John James, managing director and head of Vanguard Institutional Investor Group, said in a statement. “Growth of advice and financial wellness tools are encouraging investing behaviors that lead to retirement readiness for more Americans.”
The report indicated that in 2023, a record-high 59% of plans offered automatic enrollment. Among auto-enrollment plans, 60% defaulted employees at a deferral rate of 4% or higher, an all-time high.
Vanguard noted that 10 years ago, only 35% of plans defaulted employees into the plan at a rate of 4% or higher. In 2023, 43% of participants — more than in any previous annual report — increased their savings rate, motivated in part by plan design features like automatic annual savings increases.
According to the new report, the percentage of plans offering managed account advice is at a record high, and more participants than ever with access to advice enrolled in the service in 2023.
See the gallery for 12 findings on how employees are saving now, according to the report.
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