Vanguard recently released the 2022 edition of their annual How America Saves report, a 110-page report targeted at industry insiders which looks at the nearly 5 million 401k, 403b, and other defined-contribution retirement plans. If you wish to geek out on 401k stats, there is a great deal of information in this report. Here are a few highlights based on 2021 data:
Employee contributions. The average/median employee contribution rate amongst participants was 7.3{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f}/6.1{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f} in 2021. Median means that half of people were saving more, while half were saving less. Average is weighted more by absolute dollar savings. (Click to enlarge.)
Employer contributions (company match). The total average/median contributions by year was 11.2{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f}/10.3{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f} (employer and employee combined). This means that the average/median employer/company contribution was about 4{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f}. (Click to enlarge.)
How much does Vanguard think we should be saving? I found this quote noteworthy:
We believe participants need to reach a total saving rate of 12{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f} to 15{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f} or more to meet their retirement goals.
Maxing it out! Overall, 14{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f} of participants saved the maximum annual amount of $19,500 ($26,000 age 50+) for 2021. However, 58{d9c4d960ee45891fbf714ed8da589b701a1be4efa840b87811584c6b796cb03f} of those with incomes of $150,000+ maxed out their contributions. Here is the full breakdown by income:
(Not really sure how the folks earning under $15k per year are doing it… maybe these income numbers are after subtracting the contributions?)
How are people investing? Asset allocation. This chart shows the trends in asset allocation as the participants age. The increased use of Target-date funds and other professional management options has changed it so that young people are less likely to hold cash. (Click to enlarge.)
Account balances. The average account balance was $141,542 for 2021; the median balance was $35,345. This disparity means that a small number of plans with very high balances skews this often-quoted average upward. (Click to enlarge.)
I don’t pay much attention to this stat because the average includes workers across different age groups, income levels, job tenures, and so on. If I just switched jobs and rolled over my old 401k into an IRA, technically my balance is zero no matter what.
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How Do Your 401(k) Stats Compare? Vanguard How America Saves 2022 from My Money Blog.
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