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The average 401(k) savings rate has maintained a record high, as some retirement plans make it easier for workers to enroll and contribute.
In 2024, the average combined savings rate for employee deferrals and company deposits was an estimated 12%, according to Vanguard’s newly released yearly analysis of more than 1,400 qualified plans and nearly 5 million participants. That percentage matched record-high levels from 2023.
A separate report from Fidelity also noted all-time high 401(k) savings rates, with the combined worker and company rate climbing to 14.3%. Those findings reflected 25,300 corporate plans with 24.4 million participants during the first quarter of 2025.
Despite some years of stock market volatility, Vanguard’s reports have shown a “relentless positive trend line” across plan participation, savings rates and investing, Dave Stinnett, the company’s head of strategic retirement consulting, said during a press call Monday afternoon.
Over time, retirement plans have added features like automatic enrollment and immediate eligibility for employee contributions, which have boosted participation, experts say.
Automatic enrollment signs employees up to contribute to plans unless they opt out. But some companies have waiting periods before employees can contribute to the plan.
In 2024, 76% of plans offered immediate eligibility for employee contributions, up from 71% in 2020, Vanguard reported. Some 61% of plans included automatic enrollment in 2024, up from 54% four years prior.
The 401(k) savings ‘rule of thumb’
For 2024, the combined worker and company 401(k) savings rate was within Vanguard’s “rule of thumb,” according to Stinnett. Vanguard suggests saving 12% to 15% of your pay per year, including employer contributions, depending on your income.
(Meanwhile, Fidelity recommends a 15% benchmark, so its recent record was still shy of that target.)
“Make sure that that trend keeps going higher and higher,” Stinnett said.
For 2024, the average employee deferral rate was an estimated 7.7%, and one-quarter of participants saved 10% or higher, according to the Vanguard report.
An estimated 14% of workers maxed out 401(k) plans in 2024, Vanguard found. Those workers were typically older, with higher incomes, larger account balances and longer tenure with their employer.
However, the ideal savings percentage depends on several factors, according to certified financial planner Trevor Ausen, founder of Authentic Life Financial Planning in Minneapolis.
“I don’t follow a single target retirement savings rate across the board,” he said. It depends on “the client’s current financial position, lifestyle expectations and timeline to retirement.”
The percentage could also change if you’re expecting a pension, aiming for early retirement or plan for part-time work in your golden years, Ausen said.
However, advisors typically recommend deferring at least enough to receive your full employer’s matching contribution.
Employer matches can vary widely, so it’s important to review your plan documents.
The most popular 401(k) match formula — used by 48% of companies on Fidelity’s platform — is 100% for the first 3% an employee contributes, and 50% for the next 2%.
For 2024, most Vanguard plans used a single-tier match formula, such as 50 cents per dollar on the first 6% of pay, the company reported.
