Perspectives : DC Retirement | March 11, 2024

Previewing How America Saves 2024: Strong participant outcomes despite economic problems 

Read time: 3 minutes

Participant outcomes remained strong despite an uncertain economic environment in 2023, as plan sponsors continued to implement automatic solutions. How America Saves 2024, the 23rd edition of our annual analysis of retirement saving behavior, will explore this and other trends.

You can read a preview of How America Saves 2024 now; the full report will be available in June. The information in both the preview and the full report can help plan sponsors continue to optimize plan design. 

Positive retirement plan trends

Three positive trends stand out in this year’s report:

1. Plan design continued to improve. As of year-end 2023:

  • 59% of Vanguard 401(k) plans allowing employee elective deferrals had adopted an automatic enrollment design.
  • 77% of plans with at least 1,000 participants used the feature.
  • 60% of plans with an automatic enrollment design defaulted employees into the plan at 4% or higher, a trend that’s increased every year.
  • Nearly 7 in 10 plans automatically enrolled employees into an annual escalation feature that increases their deferral percentage.

2. Account balances rose. 

  • Average account balances increased by 19% in 2023, primarily driven by market performance.
  • The average participant account balance was $134,128 as of year-end 2023.
  • The median account balance was $35,286, a 29% increase since year-end 2022.

3. Employee contributions increased at an extraordinary rate. In 2023:

  • 15% of participants increased their payroll deferral percentage.
  • 28% had their deferral percentage increased by an annual automatic escalation.
  • The 43% of participants who increased their savings is the highest that we’ve ever tracked in How America Saves

Plan sponsor to-dos

Despite the progress, opportunities for improvement remain. Plans not yet using automatic enrollment should consider adding it. For plans with automatic enrollment, plan sponsors should monitor how quickly the plan is designed to get participants to a 12%-15% total savings rate.

Employees face many competing financial priorities, including student loans, paying for healthcare, credit card debt, and establishing and funding an emergency savings account. Plan sponsors can help support their employees by offering cost efficient, high-quality advice and a platform that provides guidance on financial well-being—two valuable services that can provide personalized solutions.