Automatic enrollment in 401(k) plans is helping Americans save for retirement in record numbers, a new study finds.
Participation in 401(k) plans, for which the asset manager is the record holder, hit a record 83%, according to a Vanguard study released Thursday. Vanguard’s annual report, “How to Save in America,” also found that employers are increasingly offering advice and other personalized financial services to enhance retirement planning.
Last year, 41% of all plans offered advisory services, according to the survey, up to 81% of plans with 5,000 or more employees. Nearly three in four plan participants now have access to advice, including robo-advisors and guidance from certified financial planners, according to Vanguard.
“Automated solutions have revolutionized retirement planning over the past decade. But your investment success depends not only on the funds you own, but also on the advice you get for them. “We will advance the next areas of retirement savings with personalized advice to help investors achieve their long-term goals,” Chairman and CEO Tim Buckley said in a statement. rice field.
Elsewhere the report showed that auto-registration removes barriers to entry for retirement savers. Nearly 58% of plans and 76% of plans with more than 1,000 participants use this design, according to the report.
Automation also helps retirement savers stay on track amid market uncertainty. Nearly a quarter of participants were saving at least 10% of their income for retirement, according to the study, with the average deferral rate hitting a historic high of 7.4%.
Finally, Vanguard’s report showed that participant trading has declined dramatically over the past 15 years, with only 6% of participants trading last year. This is likely due to increased adoption of target-date funds and more retirement savers adopting buy-and-hold strategies.