Vanguard recently released its 23rd edition of the flagship research report, “How America Saves,” detailing the latest savings trends among nearly 5 million Vanguard plan participants. Here are three key observations from the 2023 data:

  • Plan participation and participant savings rates reached all-time highs.
  • Adoption of “Automatic Enrollment” increased significantly.
  • The percentage of plans offering investment advisor services reached its highest level yet.

The report spans over 100 pages, so we’ve picked the most notable trends for you below.

Vanguard plans offering immediate eligibility for participation increased from 69% in 2019 to 74% in 2023.

“Automatic Enrollment” is set to become a requirement for most new plans, and currently, 59% of Vanguard plans already include this feature, a percentage that has risen annually over the past five years.

Notably, 96% of plans now offer employer contributions—through Safe Harbor, Matching, or Profit Sharing—which are excellent tools for hiring and retaining employees.

Additionally, nearly 4 out of 5 plans now offer Roth contributions, another design feature that has seen steady growth over the last five years.

The average participant deferral or savings rate across all age groups is around 7.4%, a figure that has remained steady over the past five years. However, only about 1 in 4 participants save more than 10% of their pay.

The average participant account balance was $134,128 in 2023. Account balances have experienced fluctuations over the past five years but remain a crucial metric for understanding retirement readiness.

Participants’ average equity allocation is around 74%, with about 8% of participants allocating 100% of their contributions to either equity or fixed income. These figures are consistent with trends observed over the last five years.

Vanguard plans typically offer around 17 funds, significantly fewer than iQ401k plans, which offer 30 to 40 funds.

Additionally, 88% of Vanguard plans have designated a Qualified Default Investment Alternative (QDIA), compared to 100% of iQ401k plans. Having a QDIA is essential for providing a successful retirement program.

In 2023, approximately 81% of Vanguard plans offered loans to participants, up from 78% in 2019. Of these, 72% offer loans at an interest rate of Prime + 1%.

These insights from Vanguard’s report highlight the evolving landscape of retirement savings and underscore the importance of plan design, employee deferrals, and investment options in helping participants achieve their retirement goals.