34 401k Statistics to Help You Prepare For a Happier Retirement
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The employee-sponsored 401k plans are some of the best retirement saving options. According to 401k statistics, Americans have invested $5.7 trillion in these plans, accounting for about 20% of the total US retirement share.
401k plans are very popular because they automate savings and lower tax bills. At the same time, the money grows tax-free.
However, before you start planning your retirement fund, take a look at the most important stats and facts below and make an informed decision.
Important 401k Statistics in 2022
- A 401k plan is offered to 68% of Americans.
- 79% of full-time workers actively contribute to a 401k plan.
- With $198,600, the 401k balance is the highest among savers aged 60–69.
- 365,000 401k plans have a balance of at least $1 million.
- The average expense ratio is 0.5–1% for actively managed funds.
- The contribution limit for savers under 50 is $19,500.
- The average deferral percentage is 7.1%.
- Over a third of companies auto-enroll employees in 401k plans.
401k Plan Statistics
1. 68% of Americans have access to a 401k plan.
401k is one of the best retirement saving options for Americans. However, not all employees have access to one.
The latest numbers reveal that a 401k plan is available to 68% of Americans. Furthermore, full-time workers (74%) are more likely to have access to a 401k plan than part-time workers (45%).
Additionally, the percentage of Americans with 401k who actively contribute to that plan is 76%. In fact, the number is higher among full-time workers (79%) than part-time workers (58%).
2. Total US retirement assets were $37.2 trillion in June 2021.
(Retirement Income Journal)
In other words, retirement assets accounted for 33% of the financial equity of all US households. This is up by 4.8% from March 2021.
3. The average 401k balance at retirement among all workers is $93,000.
Moreover, Baby Boomers manage to save the most—$202,000, followed by Generation X with 107,000. Millennials come in next with $68,000, whereas Generation Z savers have $26,000 on average.
4. The average 401k balance is $129,300.
Retirement plan statistics reveal that the average 401k balance dropped 19% to $91,400 at the beginning of the pandemic in 2020. However, the number has rebounded since, up 24%.
5. With $198,600, savers aged 60–69 have the highest 401k balance by age.
The average 401k balance varies by age. For example, it’s the lowest among young people aged 20–29 and the highest among 60–69-year-old savers.
- For 20–29-year-olds — $11,600
- For 30–39-year-olds — $43,600
- For 40–49-year-olds — $106,200
- For 50–59-year-olds — $179,100
- For 60–69-year-olds — $198,600
- For savers aged 70+ — $186,800
6. Connecticut has the highest average 401k balance by state—$545,754.
Other states in the top five include New Jersey ($514,245), New Hampshire ($512,781), Alaska ($503,822), and Vermont ($494,569). On the other hand, Utah is the last-ranked state per 401k balance ($315,160).
7. The manufacturing sector is the leader in the retirement benefits field with 67.1%.
On the other hand, only 23% of the companies in the leisure and hospitality sectors offer retirement savings plans. According to the average 401k match stats, the low percentage is mainly due to the nature of the industry and a large number of part-time and seasonal workers.
8. Since Q1 of 2021, there have been 365,000 401k plans with a balance of at least $1 million.
The total number of retirement millionaires has almost doubled from 2020, 401k statistics show. This jump is mainly due to the boost in savings and a bull market.
9. 92% of savers actively participate in 401k plans when auto-enrolled.
Employees automatically enrolled in a 401k plan are more likely to continue participating.
According to the latest stats, the 401k participation rate in plans with automatic enrollment is 92%, compared to 62% of savers who contribute to the 401k plans when enrolled voluntarily.
Additionally, employees in plans using automatic enrollment save 10.7% of their salary, compared to 6.8% of employees with voluntary enrollment savings.
10. More than 36.9% of companies automatically enroll employees in 401k plans.
An automated enrollment can help employees start their journey towards better savings. More than a third of companies now automatically enroll employees in 401k. The percentage is the highest (62%) among larger companies with 50,000+ employees that automatically enroll them. In fact, over 90% of workers enrolled automatically in a 401k plan stay enrolled.
Interesting 401k Stats & Facts on Contribution
11. The limit of employee and employer contributions will be $61,000 in 2022.
The employer 401k match isn’t a part of the maximum contributions employees can make. However, it’s restricted by the total contribution limits. In 2021, the maximum contribution limit made by employees and employers can’t exceed $58,000 for workers under 50. For employees aged 50 or older, the total contribution can’t exceed $64,500.
12. The defined contribution market size reached $9.64 trillion in 2020.
The 401k plan is the most common defined contribution (DC) plan in the US. The total assets of retirement DC plans have grown over the past two decades, from $2.96 trillion in 2000. The only exception was in 2018 when it dropped to $7.55 trillion from $7.90 trillion in 2017.
13. You can contribute up to $19,500 to a 401k if you’re younger than 50.
As per the latest American 401k statistics, the contribution limit to a 401k plan is quite generous. For example, you can invest up to $26,000 if you’re at least 50 years old. On the other hand, you can invest up to $6,000 to an IRA if you’re under 50 and up to $7,000 if you’re 50+.
14. The average balance for savers who have continuously contributed to their plan for 10 years reached $402,700.
According to the latest American 401k statistics, taking the long-term approach to savings grants better results. The average balance of those who have continuously contributed to their retirement plan for a decade crossed the $400,000 mark for the first time in Q2 2021.
15. The average savings rate is 9.3%.
The average 401k contributions and the increase in average savings are most notable among young people. For example, 54% of Gen Z savers have increased their 401k contributions, the same as 43% of millennials. On the other hand, only 7% of workers have decreased their savings rate during the previous year.
16. 17% of workers increased their investments in retirement plans in Q1 2021.
In Q1 2021, the 401k percentage of workers who increased their contributions to their retirement plans was higher than in any previous quarter. At the same time, 37% of employers automatically enrolled new employees in their 401k plans, which is a record-high number.
17. 75% of people have been motivated to sign up for a 401k because they are concerned about their retirement.
401k statistics show that concern about retirement and focus on retirement readiness are the primary motivators for the people who decide to join a 401k plan and contribute actively. This concern is also evident in how often people check their accounts, as a recent survey shows that 64% of contributors check them at least once per pay period.
18. The ideal contribution percentage is 15–20% of gross income.
According to information accumulated from numerous financial planning studies, the ideal percentage to contribute to 401k is from 15% to 20% of gross income. However, a typical sweet spot is considered to be 10%–15%. Experts agree that the bare minimum should be 10% to make sure you have good savings for retirement.
19. 45% of millennials report investing in a 401k or an IRA.
Moreover, 33% actively contribute to their plan. For comparison, only half of Gen X-ers have a retirement plan, and 36% actively contribute to it.
20. The average 401k contribution by an employer is estimated at $4,040.
Employer contributions are usually provided when employers match a portion of what employees save. On average, employers match 4.3% of a worker’s pay. On the other hand, employees contribute approximately $6,940 per year.
21. In Q2 2021, 18.2% of Baby Boomers increased their contribution to 401k.
The average 401k contribution by age varies, and the latest numbers point out that it increases significantly among Baby Boomers as they approach retirement. In fact, nearly 60% of them invested a maximum of $6,500 by the end of 2020. Among those with IRA, the average contribution increased by 17% YoY to $3,570.
401k Statistics on Withdrawals & Loans
22. 32% of savers have taken an early withdrawal, hardship, or loan at some point.
It’s not uncommon for savers to dip into their retirement accounts before retiring. Recent stats reveal that more than one-third of workers have taken a loan, hardship withdrawal, or early withdrawal from their savings account at some point in their lives. Moreover, millennials are more likely to withdraw assets from their retirement savings (43%) than Gen X (27%) and baby boomers (11%).
23. The mandatory federal income tax withholding of a 401k withdrawal is 20%.
The 401k withdrawal tax rates are quite high. Apart from an early withdrawal tax, the IRS penalizes you 10% for withdrawing money before you’re 59 ½ years old.
24. In 2020, 5.7% of employees with a 401k account withdrew retirement assets.
As a part of the CARES Act and in response to the COVID-19 pandemic, retirement savers could withdraw up to $100,000 from their plan. The average 401k interest rates didn’t apply to these early withdrawals.
Approximately 6% of workers affected by the coronavirus and in need of covering hospital care costs took advantage of this act and withdrew assets. Additionally, 1.7% of surveyed savers took a hardship withdrawal, and 3.4% took a non-hardship withdrawal.
25. The percentage of workers who made a withdrawal dropped to 2.4% in Q1 2021.
The withdrawal 401k trend slowed down in 2021 despite the fact that workers still faced pandemic-related financial struggles. In fact, the percentage of those who withdrew money from their retirement plans dropped from 6.1% in Q4 2020. Additionally, 17.5% of employees had an outstanding 401k loan in 2021, down from 19.7% in Q1 2020.
26. The 401k loans interest rates range between 6.5% and 7.5%.
The 401k loans come with an interest rate of up to two points above the prime rate. For example, the prime rate is now 5.5%, so the 401k loan rate is estimated to be between 6.5% and 7.5%. In addition, the interest rate is the same regardless of the individual’s credit score, which makes these loans tempting.
401k Rates & Fees
27. 85% of contributors think it’s essential that their plans have transparent and low-cost fees.
Getting a contributor to be fully engaged in a 401k plan can sometimes be difficult due to numerous reasons. High fees are among the most critical factors that impact the engagement level. Moreover, a recent survey showed that 75% signed up for a 401(k) since they are focused on and concerned about their retirement readiness.
28. The average 401k deferral percentage is 7.1%.
(For Us All, BambooHR)
A 401k deferral rate is the percentage of an employee’s pay deducted from their paycheck and contributed to their 401k plan through an employer. In 2019, the rate was reported to be 6.2%, whereas it reached an all-time high of 8.6% in 2018.
29. The average expense for the 100-participant plan is 1.15%.
The average 401k fees by plan size can vary considerably. Generally, the account balances with the larger average expense should produce lower fees. To put things into perspective, the average investment expense for a 500-participant plan is 1.22%. The average costs of the plans are 1.23% and 1.51%, respectively.
30. The average yearly 401k return rate is estimated at 3–8%.
The 401k return rates depend on the assets. In other words, the greater the growth potential, the greater the risk. For example, an estimation based on a 60/40 allocation consisting of 60% of equities and 40% of cash can provide an annual return between 5% and 8%.
31. 401k fees can range from 0.5% to 2%.
The average 401k fees fall within four categories—investment, individual service, administrative, and custodial. They vary depending on several factors, including the employer’s 401k plan size, the plan provider, and the number of participants.
32. The average 401k employer contribution rate is 4.6% of the employee’s salary.
In fact, the average employer contribution to 401k is $1,720. In the first quarter of 2021, companies made matching 401k contributions to 83% of employees. The most popular matching method is matching 100% for the first 3% of an employee’s contribution and 50% for the next 2%. This formula was used by 41% of employers in the said quarter.
33. The spouse is entitled to 50% of the money in the event of the savings account owner’s death.
(401k Help Center)
The 401k beneficiary percentage is determined under the Employee Retirement Income Security Act. Moreover, if another person is a designated beneficiary, the spouse’s percentage upon the account owner’s death is also 50%.
34. For actively managed funds, the expense ratio ranges between 0.5% and 1%.
One of the reasons the average 401k expense ratio varies is how a 401k account is managed. In fact, the expense ratio is always lower for passively managed funds.
Hopefully, the stats we provided helped you form a better picture of the average 401k contribution rates and fees, current trends, and pros and cons.
Even though a 401k plan comes with somewhat high fees and limited investment options, it’s still one of the best options for growing your nest egg. If armed with the right knowledge, you’ll be able to take full advantage of this retirement-saving option.
So, consider all your options and make sure to invest in your future for a happier retirement.
People Also Ask
How many employers offer 401k?
401k plans have become the primary way for employers to demonstrate their commitment to workers’ financial well-being during and after their working lives. In general, 68% of employers offer a 401k plan. Moreover, 92% of large companies provide a retirement savings plan. However, the number is significantly lower for companies with fewer than 100 workers, as only 72% of them have a retirement savings plan in place.
What percentage should I contribute to my 401k?
The ideal 401k contribution percentage is 15–20%. According to experts, such a saving percentage will allow you to retire “rich.” However, the sweet spot is between 10% and 15%. Setting aside at least 10% of your salary will allow you to set yourself up just fine. In fact, if you want to retire at the age of 67, you should have 10 times your final salary in savings.
How much should I have in my 401k at 30?
To calculate how much you should have in your 401k account by a certain age, add one year of salary saved for every five years of age. For example, by the age of 30, you would ideally have 401k savings equal to approximately one year of your salary. So, if you’re making $50,000 a year, you should have saved $50,000.
How much should I have in my 401k at 45?
According to some estimations, the ideal amount saved at 45 is four times your annual salary. Furthermore, the latest data reveals that people have an average balance of $443,686 between 45 and 54. In fact, savers can make larger contributions to the 401k retirement amount once they are 50. These contributions are known as catch-up contributions.
Is 401k an asset?
A financial asset is anything owned that adds financial value. So, retirement accounts are considered assets. Retirement plans like 401k are held in a financial institution and are important financial assets that grow and become liquid once a saver reaches retirement age. If removing money from a 401k account, the saver would have to pay penalties or get a loan and then pay the money back.
What is the average 401k match?
About 86% of employers provide some form of match. In fact, the average employee matching is 4.3% of a worker’s pay, and it varies depending on the company. Employees use different matching formulas, and the most common is to match $0.5 for every $1 of the employee contribution. Some companies might even match 100% of the employee contribution ($1 for $1), but the maximum match is usually low in these cases.
What percentage of Americans have a 401k?
Even though 401k is one of the best retirement saving options, not all Americans have access to one. According to the latest data available, a 401k is available to 68% of workers. Among those offered a 401k plan, 76% participate in it and contribute 10% of their yearly salary. Moreover, with 79%, full-time employees are more likely to participate in their company’s retirement plan than part-time workers (58%), 401k statistics reveal.
- 401k Help Center
- Business Insider
- Financial Samurai
- For Us All
- Personal Capital
- Personal Capital
- Plan Sponsor
- Retirement Income Journal
- SoFi Learn
- Transamerica Center