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June 29, 2015 at 08:00 PM
Vanguard’s latest research on Americans’ savings habits shows participation is steady at around 75%. “How America Saves 2015” examines 1,900 plans with more than 3.6 million participants that use Vanguard as their record-keeper.
Jean Young, lead author of the report and a senior research analyst with the Vanguard Center for Retirement Research, attributed that to automatic enrollment “The first step in retirement savings is participation,” she said in a statement. “Over the past decade, we’ve seen a meaningful jump in total participation rates. Three-quarters of eligible workers now participate in their employer’s plan, up from two-thirds 10 years ago, underscoring the impact of autopilot plan designs.”
The number of plans that use auto-enrollment has doubled since 2009, but is still low at 36%. About half of the sponsors of Vanguard plans automatically enroll eligible non-participants as well as new hires.
Unfortunately, the survey found more than 60% of plans automatically enroll participants at only 3%. However, of the plans with auto-enrollment, 70% automatically escalate contributions as well. About half of participants are contributing at 10% or more.
