Every once in a while, the data tells a story that plan sponsors should actually feel good about. Vanguard’s latest How America Saves report offers just that, a story of progress. Thanks to smarter plan design choices, participants are saving more, engaging better, and showing greater retirement resilience.
And it’s not by accident. It’s by design.
What the Numbers Show
The report looks at nearly five million participants and the findings are hard to ignore:
· 76% of plans now offer immediate eligibility to contribute.
· 61% of auto-enrollment plans default at 4% or higher, nudging people to save more from day one.
· Roth contributions are climbing, with 18% of participants using Roth and 86% of plans offering it.
· 67% of participants are fully invested in a managed solution, like a target-date fund or managed account.
· 45% of participants increased their savings rate last year, pushing both deferral rates and overall plan savings to new highs.
These aren’t just statistics, they’re proof that modern 401(k) plan features are working.
Why It Matters to You
Plan sponsors sometimes view plan design as just a box-checking exercise. But in reality, smart design reduces fiduciary risk and helps employees build better futures.
When participants save more automatically, when they’re defaulted into professional management, and when they’re given access to both pre-tax and Roth options—they win. And when participants win, plan sponsors win too.
Better participant outcomes mean less exposure to litigation, fewer complaints, and a stronger defense if fiduciary processes are ever challenged.
What You Should Be Doing
1. Check Your Auto Features If you’re not using automatic enrollment, or you’re defaulting participants at 3% or lower, you’re missing an opportunity. Higher default rates don’t cause opt-outs; they lead to better savings.
2. Review Roth Availability More participants are asking about Roth contributions, and tax diversification is
becoming part of the retirement planning conversation. If you’re not offering Roth, you’re behind.
3. Reassess Your Default Investments With two-thirds of participants using managed solutions, target-date funds should be the qualified default investment alternative (QDIA) in most cases. That’s not just good practice, it’s good protection.
4. Track Participant Behavior Don’t just install good features. Measure whether they’re being used. Are deferral rates increasing year to year? Are more participants engaging with Roth? That’s fiduciary gold when you need to show your process works.
Final Thought
What this data tells us is simple: plan design isn’t just about structure, it’s about impact. Small decisions like setting a default rate or enabling Roth deferrals have real, measurable effects on people’s retirement outcomes.
We don’t often get a pat on the back in this business, but this is one of those times. If you’ve built a plan that pushes employees to save better, you’re doing your job. Keep it up, and keep improving.
