How America Saves 2013

Only 11% of people are contributing the maximum amount to their 401(k). How does America save for retirement? How does your retirement saving compare? Defined contribution plans such as 401(k)s are the foundation for retirement savings in America. The private sector (excluding government employees) retirement system covers over 80 million Americans and has total assets in excess of $4 trillion.

The Vanguard Group is one of the leaders in the defined contribution marketplace with more than $500 billion in assets and full-service plans covering 1,600 employers and over 3 million employees. Every year, The Vanguard Group publishes a report entitled "How America Saves" that summarizes participation in the plans they manage.

"7% is the average employee retirement contribution rate as a percentage of pay." [Tweet This]

Survey: 25% People Don't Contribute to Workplace Retirement Plans

Here are some highlights:

  • 76% of eligible participants actually contribute to their 401(k)
  • 24% of eligible participants contribute 0% (guess when they will retire)
  • 7% is the average employee contribution rate as a percentage of pay
  • 22% contribute more than 10% of pay
  • 11% contribute the maximum dollar amount allowed ($17,000 in 2012)
  • 10.5% is average total contribution rate (employee and employer)
  • $8,050 is average annual employee and employer contribution total

How Much You Save Matters More than Investment Returns

The amount that you and your employer contribute to your retirement plan is a far more important factor in your retirement security than the investment returns.

Your "savings rate" is one number you should know and grow!