Americans are saving more for retirement than ever before. Vanguard’s new report shows that in 2024, the average 401(k) savings rate reached a record high of 12%. This includes both employee contributions and company matches.
The report looked at over 1,400 plans with nearly 5 million participants. It found that more plans are offering features that boost participation and savings. For example, 76% of plans now offer immediate eligibility for employee contributions.
That’s up from 71% in 2020. Also, 61% of plans have automatic enrollment, compared to 54% four years ago. With automatic enrollment, workers are signed up for the 401(k) plan by default.
They have to opt out if they don’t want to participate. On average, employees are setting aside 7.7% of their pay in their 401(k)s.
Vanguard highlights rising 401(k) participation
One-quarter of participants are saving 10% or more. And 14% maxed out their contributions in 2024. “We’ve seen a relentless positive trend line,” said Dave Stinnett, head of strategic retirement consulting at Vanguard.
He noted that the 12% average savings rate matches Vanguard’s general recommendation. However, the ideal savings rate can vary a lot from person to person. Financial advisors say it depends on factors like your current finances, retirement lifestyle goals, and timeline.
Having a pension or plans to work part-time in retirement can also affect how much you need to save. At a minimum, advisors suggest contributing enough to get the full employer 401(k) match. The most common match is 100% on the first 3% of pay that the employee contributes, then 50% on the next 2%.
The report’s findings highlight how more Americans are prioritizing saving for retirement. Employers are also increasingly adopting plan features that encourage participation and higher contribution rates. This combination is helping workers build bigger nest eggs for their later years.
