{"id":32471,"date":"2025-06-24T14:13:22","date_gmt":"2025-06-24T14:13:22","guid":{"rendered":"https:\/\/financialrush.com\/?p=32471"},"modified":"2025-06-24T14:13:22","modified_gmt":"2025-06-24T14:13:22","slug":"the-average-401k-savings-rate-is-at-record-high-levels-report-finds","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32471","title":{"rendered":"The average 401(k) savings rate is at record-high levels, report finds"},"content":{"rendered":"

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Milan Markovic | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

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The average 401(k) savings rate<\/a> has maintained a record high, as some retirement plans make it easier for workers to enroll and contribute.<\/p>\n

In 2024, the average combined savings rate for employee deferrals and company deposits was an estimated 12%<\/a>, according to Vanguard\u2019s newly released yearly analysis of more than 1,400 qualified plans<\/a> and nearly 5 million participants. That percentage matched record-high levels from 2023.<\/p>\n

A separate report from Fidelity also noted all-time high 401(k) savings rates<\/a>, with the combined worker and company rate climbing to 14.3%. Those findings reflected 25,300 corporate plans with 24.4 million participants during the first quarter of 2025.<\/p>\n<\/div>\n

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More from FA Playbook:<\/h2>\n
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Here\u2019s a look at other stories affecting the financial advisor business.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Despite some years of stock market volatility, Vanguard\u2019s reports have shown a \u201crelentless positive trend line\u201d across plan participation, savings rates and investing, Dave Stinnett, the company\u2019s head of strategic retirement consulting, said during a press call Monday afternoon.<\/p>\n

Over time, retirement plans have added features like automatic enrollment<\/a> and immediate eligibility for employee contributions, which have boosted participation, experts say.<\/p>\n

Automatic enrollment signs employees up to contribute to plans unless they opt out. But some companies have waiting periods before employees can contribute to the plan.<\/p>\n

In 2024, 76% of plans offered immediate eligibility for employee contributions, up from 71% in 2020, Vanguard reported. Some 61% of plans included automatic enrollment in 2024, up from 54% four years prior.<\/p>\n<\/div>\n

The 401(k) savings \u2018rule of thumb\u2019<\/h2>\n
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For 2024, the combined worker and company 401(k) savings rate was within Vanguard\u2019s \u201crule of thumb,\u201d according to Stinnett. Vanguard suggests saving 12% to 15%<\/a> of your pay per year, including employer contributions, depending on your income.<\/p>\n

(Meanwhile, Fidelity recommends a 15% benchmark,<\/strong> so its recent record was still shy of that target.)<\/p>\n

\u201cMake sure that that trend keeps going higher and higher,\u201d Stinnett said.<\/p>\n

For 2024, the average employee deferral rate was an estimated 7.7%, and one-quarter of participants saved 10% or higher, according to the Vanguard report.<\/p>\n

An estimated 14% of workers maxed out 401(k) plans in 2024, Vanguard found. Those workers were typically older, with higher incomes, larger account balances and longer tenure with their employer. \u00a0\u00a0<\/p>\n<\/div>\n

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However, the ideal savings percentage depends on several factors, according to certified financial planner Trevor Ausen, founder of Authentic Life Financial Planning in Minneapolis.\u00a0<\/p>\n

\u201cI don\u2019t follow a single target retirement savings rate across the board,\u201d he said. It depends on \u201cthe client\u2019s current financial position, lifestyle expectations and timeline to retirement.\u201d\u00a0<\/p>\n

The percentage could also change if you\u2019re expecting a pension, aiming for early retirement or plan for part-time work in your golden years, Ausen said.<\/p>\n

However, advisors typically recommend deferring at least enough to receive your full employer\u2019s matching contribution.<\/p>\n

Employer matches can vary widely, so it\u2019s important to review your plan documents.<\/p>\n

The most popular 401(k) match formula \u2014 used by 48% of companies on Fidelity\u2019s platform \u2014 is 100% for the first 3% an employee contributes, and 50% for the next 2%.<\/p>\n

For 2024, most Vanguard plans used a single-tier match formula, such as 50 cents per dollar on the first 6% of pay, the company reported.<\/p>\n<\/div>\n<\/div>\n\n
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