Americans Are Putting Billions More Than Usual in Their 401(k)s

Americans Are Putting Billions More Than Usual in Their 401(k)s

Recap:  Automatic enrollment + auto-escalation.  Fees on 401(k) plans are falling.

Stats:

  • The typical baby boomer, whose generation is just starting to retire, has a median of $147,000 in all of his retirement accounts, according to the Transamerica Center for Retirement Studies
  • 1 in 3 private sector workers don’t even haveretirement plan through their job
  • On average, workers in 2015 put 6.8 percent of their salaries into 401(k) and profit-sharing plans, according to a recent survey of more than 600 plans. That’s up from 6.2 percent in 2010, the Plan Sponsor Council of America found.
  • About $7 trillion is already invested in 401(k) and other defined contribution plans, according to the Investment Company Institute.
  • Employers pitched in 4.7 percent of payroll in 2015, the same as in 2013 and 2014.
  • In such plans, 89 percent of workers are making contributions, the survey finds, while 75 percent make 401(k) contributions under plans without auto-enrollment.
  • Auto-enrolled employees save more, 7.2 percent of their salaries vs. 6.3 percent for those who weren’t auto-enrolled
  • Less than a quarter of plans auto-escalate all participants, while 16 percent boost contributions only for workers who are deemed to be not saving enough
  •  The total cost of running a 401(k) plan is down 17 percent since 2009, to 0.39 percent of plan assets in 2014. The cost of the mutual funds inside 401(k)s has dropped even faster, by 28 percent to an annual expense ratio of 0.53 percent in 2015

 

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