Thin(k) About Your Retirement: Industry Trends & Observations Post-Pandemic

Employers take note.  Recent surveys of the 401(k)-space show that the trends amongst plan sponsors is to add autoenrollment at increasingly higher initial savings rates, increase those rates and to incentivize employees to stay in the plan using matching formulas that reward participation.  These reports also show that employees, while less financially secure post-Covid, value retirement benefits and want professional assistance.  And these feelings are amplified amongst the younger employees.

Vanguard’s annual How America Saves 2024 study again offers good data about how plan sponsors are administering their plans [Click for full report].*

1. Vanguard found that plan sponsors have continued to add automatic enrollment.  59% of plans had automatic enrollment vs. 39% ten years ago.  The default savings rate for auto enrolled employees continues to increase and 98% of plans with autoenrollment use a Target Date Series.  Of course, employees can opt out of the plan if they so choose.
2. Vanguard observed that 96% of its plans’ employers offered some type of employer contribution with match being the method of choice.  The median match was 4% and employers required employees to contribute between 4% and 6% to maximize the match.

J.P. Morgan’s seventh DC plan participant survey [Click here for full report] provides numerous insights and trends regarding employees saving for retirement.*

1. Not surprisingly, post- pandemic, plan participants are feeling less financially secure.  Yet, planning for retirement remains the highest ranked financial goal prioritized by employees.
2. Younger employees, Millennials and Gen Zers ^, are more likely to seek guidance from a financial advisor than their older colleagues – important information when it comes to plan education and financial wellness strategies.  They are almost twice as likely to direct their retirement planning questions to their employer.  I will save the concept of “accidental fiduciary” for another blog, but let’s just say that you don’t want to be one.
3. 85% of respondents said that retirement benefits were an important factor when deciding to stay at or take a new job and younger employees value financial wellness programs more than Gen Xers and Boomers.  
4. 75% surveyed wished for professional advice when making investment decisions, yet only about half receive it.  In 2021, 63% of participants had access to professional advice versus 54% in this survey.  
5. Approximately 60% of participants want to completely rely on an investment professional through an “autopilot” option. This percentage has remained steady since 2018.

If you have a plan, make sure you are achieving your goals for the plan and the employees.  If you do not have a plan, no time better than the present to start one – more on that later.

*  The Vanguard data is from 2023, and the JP Morgan observations were made in 2024.  For full methodology and sample sizes, click the links provided above.

^ Special service announcement that I hope this helps you as much as it did me…

• Boomers born 1946-1964
• Gen X born 1965-1980
• Millennials born 1981-1996
• Gen Z born 1997-2012

For disclosures, please click here.