Report : DC Retirement | October 24, 2023

How Americans can save more for retirement

Read time: 6 minutes

Data from Vanguard’s How America Saves 2023 shows participation rates and deferral rates are improving, but there's still work to be done regarding how much workers are saving for retirement. This commentary explores various ways plan sponsors can help participants save more and how Vanguard can support this effort.
The percentage of Americans saving for retirement and investing in professionally managed allocations has never been higher, thanks in large part to strategic improvements in plan designs in recent years. And while data shows that about half of participants have relatively strong saving levels, the other half may not be saving enough.

Participants’ median total saving rate was 10.6% in 2022. Vanguard recommends at least 12% to 15%.

A shortfall in employee deferrals

Although average employee deferral rates have trended upward in recent years, many investors are still not saving enough. One in 4 participants had a deferral rate of less than 4% in 2022. Not only are these participants saving at relatively low levels in general, they’re also likely not receiving their full employer match benefit, thus missing out on even more potential retirement savings.

So, what can plan sponsors do to help increase employee deferral rates in their plans?

Cue automatic solutions

Automatic solutions—features such as automatic enrollment, automatic increase, and undersaver sweeps—are great ways to get employees to start saving and to save more over time. And these features typically have high success rates, with approximately 70% to 90% of participants choosing not to opt out of the feature.1

Starting strong and maximizing the match

To help participants get off to a strong start, plan sponsors can set automatic enrollment default deferral rates in line with the rate necessary for participants to receive the full employer match benefit. And don’t worry—higher initial deferral rates don’t tend to affect the rate at which employees opt out of the plan.2

Sponsors can also implement undersaver sweeps to automatically identify participants saving below the maximum match level and increase their deferrals to the amount needed to receive the full match. 

Increasing over time 

Automatic increases are an effective way to help participants reach our suggested saving rate of 12% to 15% over time. Participants enrolled in a plan with an automatic increase save, on average, 20% to 30% more after three years than participants in a similar plan without automatic increase.

Plan sponsors can set automatic increase caps at a rate that ensures participants’ total saving rate reaches at least 15%. They can also default automatic increases to 2% increments rather than the traditional 1% to help participants reach 15% sooner.

An automatic increase of just 1% to 2% can help participants save 20% to 30% more.


A strong plan design with automatic solutions can have the greatest influence on participant saving habits, but there are opportunities to engage participants to take positive actions throughout their careers.

For example, participants who received personalized meet-your-match nudges in 2022 were up to three times more likely to increase their deferrals than were similar participants who did not receive the offer.

Advances in machine learning and artificial intelligence enable plan sponsors and recordkeepers to deliver targeted, relevant nudges to participants at scale, encouraging them to take small, manageable steps that can ultimately yield the greatest results over time.  

What are the takeaways?

Americans’ retirement readiness hinges upon saving enough and investing appropriately throughout their careers. More workers than ever are participating in their retirement plans and investing for their futures. But there remains a shortfall in many workers’ saving rates.

Plan sponsors should consider taking the following actions to help increase employee deferrals in their plans:

  • Set automatic enrollment deferral rates in line with the amount needed to maximize employer match.
  • Use undersaver sweeps to increase deferrals for participants saving less than the maximum match level.
  • Cap automatic increases at a level that ensures participants reach a total saving rate of 15% or more.
  • Default automatic increases to 2% increments instead of 1%.

If you’re interested in diving deeper into the data on participant saving behaviors, check out the full How America Saves 2023.

Enjoy this article? Read more Vanguard Viewpoints. 

1Automatic Solutions Don't End With Automatic Enrollment, Vanguard. August 2022.

2Automatic Enrollment: The Power of the Default, Jeffrey W. Clark and Jean A. Young, Vanguard, February 2021.

Source: How America Saves 2023, Vanguard.


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