Americans, and many voters, might argue current trends present worrisome possibilities. But as far as retirement savings trends go, things are looking up (mainly).
Ascensus released its annual savings trends report, Inside America’s Savings Plans, which looks at the savings behaviors of 401k, 529, health savings, and ABLE account holders on the Ascensus platform.
Importantly, it also highlights how key elements of plan design can impact savings outcomes.
So, how are savers leveraging and engaging with tax-advantaged savings vehicles?
- Savers are beginning to recognize the importance of starting to save early in their adult lives, with those ages 25 to 34 most likely to be on track to meet their retirement goals.
- Account owners and plan sponsors alike are seeing value in making saving automatic. Automatic features continue to boost retirement plan participation rates. Plans designed with automatic enrollment features see an average participation rate of 80 percent, which is 10 percentage points higher than participation in plans without automatic enrollment.
- By pairing HSAs with high deductible health plans and enabling payroll direct deposit, employers help employees build a health savings foundation.
- Savers are making progress toward their goals but are still facing an overall savings deficit. 401k account balances across all generations and income ranges are relatively low compared to what most experts suggest will be required to cover retirement goals.
“Our analysis offers some preliminary answers as to how and when individuals are saving for a more secure financial future,” David Musto, president of Ascensus, said in a statement. “But at its core, it confirms that there’s no one-size-fits-all approach to planning for what matters most—retirement, education, and healthcare.”
“Employers, state governments, and financial advisors continue to play an integral role in encouraging individuals to make the most of the savings tools available to them,” Musto concluded.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
