Americans are paying into retirement savings at a record rate, according to Valley Forge, PA-based Vanguard. That could be good news for senior living providers down the road.
The investment adviser’s most recent edition of How America Saves, a report on 401(k) plan design and retirement savings habits, provides insights into trends within the retirement industry.
The report on the retirement savings behaviors of almost five million American workers “found that the average participant deferral rate matched the historic high of 7.4% in 2023,” Vanguard said.
Employers can improve workers’ financial readiness for retirement by using tools available to them, and it appears that many employers are stepping up their game, according to the report. Despite inflationary pressures, Vanguard found that plan participation and participant saving rates reached all-time highs in 2023.
Automatic enrollment in defined contribution plans also set records last year, offered by 59% of plans. Research shows that automatic enrollment improves participation, Vanguard said.
Additionally, the percentage of plans offering an advice service was higher than ever; 75% of retirement plan participants have access to financial planning advice, according to the report.
“Smart plan design features are removing barriers to saving. Growth of advice and financial wellness tools are encouraging investing behaviors that lead to retirement readiness for more Americans,” said John James, managing director and head of the Vanguard Institutional Investor Group.
401(k) plans, he said, are “bringing together not just retirement savings, but also broader financial wellness support for employees.”
Vanguard cautioned that companies must consider the varying needs of their employees and retirement plans must accommodate Gen Zers — those born between 1997 and 2012 — as they begin to consider their future needs, as well as older workers approaching retirement.
