SAVINGS INCENTIVES: HOW 401(K)S GET US TO DO THE RIGHT THING

More workers are following experts’ advice in saving for retirement, even when finances feel precarious. It’s happening because 401(k) plans are using a simple human trait to guide us: our inclination to do nothing.

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More workers are putting more money into their 401(k) accounts, and they’re more often putting it into a reasonable mix of investments. That’s according to Vanguard’s latest look at the nearly 5 million accounts of 401(k) and similar plans that it keeps records on.

Even amid heavy uncertainty about the economy last year, retirement savers socked away an average of 7.3% of their pay, not including employer matches, according to Vanguard. That’s the same level as a year earlier, when the pandemic first struck and threw everything into doubt. And it’s up from 6.9% in 2012. Vanguard recommends workers save 12% to 15% of their pay, including any employer match.

More than four out of five workers eligible to contribute to their 401(k) were doing so last year, at 81%. That also held steady from a year earlier, and it was up from 74% in 2012.

The reason for the resiliency? In many cases it was because employers made the moves for them.