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American 401(k) savings rates reach all-time high
The U.S. retirement system faces
In 2023, according to a
Combined with employer matches, that brings the average overall savings rate to 11.7% — an all-time high.
“As you step back and look at these trends over 20-plus years, there’s just incredible progress,” said Jeff Clark, head of defined contribution research at Vanguard and the author of the study.
And it’s not just Vanguard — other researchers have also seen an uptick in American retirement savings.
What could explain these improvements? According to Vanguard, a big part of the answer is better plan design. Automatic features — such as auto-enrollment,
“Plan designs are really the strongest that they have ever been,” Clark said. “As more plans are offering auto-enrollment, we’re just seeing participation rates increase.”
In recent years, these features have become increasingly common. Vanguard found that in 2023, 59% of 401(k) plans offered auto-enrollment — the most widespread it’s ever been. Among those plans, 60% defaulted workers into a contribution rate of at least 4%. Only a decade ago, just 35% of plans did so.
The result is more money being stashed away for American retirements. Forty-three percent of plan participants increased their savings rates in 2023 — more than Vanguard had ever previously recorded.
“We’re very encouraged to highlight both progress the employers are making with how their retirement plans are set up, as well as corresponding improvements in participant behaviors,” Clark said.
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Many financial advisors say they’ve seen this trend firsthand, as clients have increased their 401(k) contributions over the years.
“We have noticed a general sentiment … that maxing out retirement contributions is table stakes,” said Brandon Garrett, CEO of
Others see more at work than just automatic plan features.
“I think it has to do with the bull market,” said John Power, principal of
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Whatever the reason, researchers and wealth managers both see a clear improvement in retirement savings — and Vanguard sees no end in sight. For one thing, thanks to
“Ten years ago, the thinking might have been that the adoption of auto-enrollment may start to plateau, but what we’re seeing is year-over-year, it continues to grow,” Clark said. “And certainly as you think about Secure 2.0 essentially mandating that new 401(k) plans have to have auto-enrollment, we can think this trend is going to continue.”