Many retirement plans are maintaining high savings rates, particularly for 401(k) accounts, by simplifying the enrollment and contribution processes for workers.
In 2024, the average savings rate for both employee contributions and company matches is projected to be about 12%, as indicated in Vanguard’s recent analysis of over 1,400 retirement plans involving nearly 5 million participants. This marks a peak for these figures since 2023.
An additional report from Fidelity shows a similar trend, with a combined savings rate for workers and employers reaching 14.3%. This data comes from a sample of 25,300 retirement plans with a total of 24.4 million participants in the first quarter of 2025.
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Despite ongoing fluctuations in the stock market, Vanguard’s analysis reveals a consistent upward trajectory in participation, savings rates, and investment strategies.
Retirement plans have gradually incorporated features such as automatic enrollment and immediate eligibility for employee contributions.
With auto-enrollment, employees are automatically set to contribute unless they choose to opt out, though some companies require a waiting period before contributions begin.
By 2024, 76% of plans offered immediate eligibility for employee contributions, an increase from 71% in 2020, according to Vanguard data. Additionally, around 61% of plans implemented automatic enrollment, up from 54% four years ago.
401(k) Savings Guidelines
Stinnett noted that for 2024, the savings rate for both employees and company contributions aligns with Vanguard’s “rule of thumb,” which recommends saving 12% to 15% of your annual salary, including employer contributions, depending on your income.
Conversely, Fidelity suggests a 15% savings target, which implies that the current records are still somewhat below that benchmark.
“It’s crucial to keep pushing that trend upwards,” Stinnett advised.
According to Vanguard, the average employee contribution rate in 2024 is projected to be around 7.7%, with about a quarter of participants saving more than 10%.
About 14% of those saving in 2024 managed to maximize their 401(k) contributions. Typically, these contributors tend to be older, earn more, have larger account balances, and have been with their employers longer.
On the other hand, Trevor Ausen, a certified financial planner and founder of Genuine Life Financial Planning in Minneapolis, commented on the variability of ideal savings rates. “I don’t adhere strictly to a target savings rate; it’s subjective,” he explained, noting that considerations include “the client’s financial situation, lifestyle goals, and desired retirement timeline.”
He added that if someone expects a pension, that could also affect their saving goals. Ausen mentioned a situation where he aimed for an early retirement or a plan to work part-time later in life.
It’s generally advisable for people to contribute at least enough to secure any employer matching contributions. Checking employer match policies is important, as these can differ significantly between companies.
The most common match formula, used by 48% of companies on the Fidelity platform, offers a full match up to the first 3% contributed, and a half match for the next 2%. In 2024, many Vanguard plans implemented a simple matching strategy, providing 50 cents for every dollar on the first 6% of salary contributed.
