Today’s workers are contributing more to their 401(k) accounts than ever before, but that doesn’t necessarily mean they’re all on track for a secure retirement.
According to data from Vanguard cited by CNBC, the average combined 401(k) savings rate reached 12% in 2024, matching the previous year’s record.
While that marks progress, how much is enough still depends on individual circumstances.
What the new savings data tells us
Vanguard’s analysis of more than 1,400 retirement plans and nearly 5 million participants found that workers and employers together contributed an average of 12% of pay in 2024.
CNBC also reports that Fidelity’s separate findings showed an even higher average, with combined contributions reaching 14.3% across its platform average.
These figures reflect a steady improvement in retirement saving habits. During a press call covered by CNBC, Vanguard’s head of strategic retirement consulting, Dave Stinnett, pointed to a “relentless positive trend line” in plan participation, contribution levels, and investment choices.
Vanguard found that employees contributed an average of 7.7% of their salary, with employer matches covering the rest. About one-quarter of participants contributed 10% or more, and 14% hit the annual federal contribution limit.
Higher-level savers were typically older, had higher incomes and account balances, and had longer tenures with their employers, Vanguard observes.
How workplace changes boost participation
Changes in plan design have helped broaden access and boost participation. In 2024, 76% of plans offered immediate eligibility for employee contributions, up from 71% in 2020, based on data from Vanguard cited by CNBC.
Automatic enrollment also became more widespread, with 61% of plans enrolling workers by default unless they opted out. This marked an increase from 54% four years earlier.
On Fidelity’s platform, the most common match formula provides a 100% match on the first 3% of pay contributed and 50% on the next 2%. Vanguard reports that many plans use simpler formulas, such as 50 cents on the dollar for the first 6% of pay.
Simplified plan access and matching incentives may help explain the rising participation rates reported by Vanguard and Fidelity.
Are these benchmarks actually enough?
While 12% to 14% contribution rates represent progress, experts note that these levels may not be sufficient for all savers.
Vanguard recommends a combined annual savings rate of 12% to 15%, including both employee and employer input, placing the average at the lower end of its guidance. Fidelity suggests a 15% benchmark, CNBC shares.
The appropriate savings rate can vary significantly depending on a person’s financial situation. Financial planner Trevor Ausen of Authentic Life Financial Planning told CNBC that there is no universal rule of thumb.
So, what should you consider when deciding how much to save? Start with:
- Age and planned retirement date
- Current account balance
- Pension eligibility
- Expected Social Security income
- Anticipated health care costs
- Desired retirement lifestyle
Financial advisors often suggest that someone starting at age 25 may be able to achieve retirement goals with consistent 10% contributions.
Those starting at age 40, however, may need to contribute more — potentially 15% to 20% — to build comparable retirement savings.
Creating a strategy that fits your timeline
One way to gauge your progress is to calculate your current savings rate: add your contributions and any employer match, then divide that number by your gross salary.
From there, it can help to use a retirement calculator to explore how different savings rates and investment returns may affect your long-term outlook.
It’s wise to contribute enough to get the full employer match if one is offered. Additional options, such as Roth 401(k)s or after-tax contributions, may provide added flexibility, especially for those making catch-up contributions later in their careers.
For those with at least $100,000 in investments, a free service called SmartAsset can match you with up to three vetted financial advisors in your area.
It’s also a good idea to periodically review your investment allocations to ensure they still align with your goals, risk tolerance, and timeline to retirement.
Why average isn’t your finish line
Record-high averages suggest progress in how Americans approach retirement saving — but they reflect broad trends, not personal adequacy.
Use national benchmarks as reference points, not finish lines.
Whether you’re ahead, behind, or somewhere in between, the most important step can be reviewing your unique situation. Consistent check-ins and small adjustments can make a big difference in long-term retirement readiness.
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