America’s 401(k) savings rate is up again—but the gap is still growing

Let’s start with the headline: in 2024, Americans saved more in their 401(k)s than ever before—on average. Vanguard reported a combined employee + employer savings rate of 12%, matching last year’s record. Fidelity said its users pushed the combined rate to 14.3% in Q1 2025.

That sounds like a win, right? And in some ways, it is. Higher savings rates mean more people are preparing for long-term financial independence. But averages are tricky. They can mask what’s really happening underneath: a system that’s helping some—and still leaving others behind. This article breaks down what the numbers actually mean, how to benchmark your own contributions, and why you shouldn’t blindly chase the average.

One reason the average looks better? It’s not because workers suddenly got more disciplined. It’s because the plans themselves are doing more of the heavy lifting. Auto-enrollment is becoming the default. In 2024, 61% of 401(k) plans used automatic enrollment—up from 54% just four years ago. That means new employees are signed up to contribute unless they actively opt out.

Not only that, but 76% of plans now offer immediate eligibility. So you can start saving on day one of your job instead of waiting months to qualify. This combo—auto-enrollment + instant access—creates a powerful behavioral nudge. People are more likely to save simply because the system sets them up to. So yes, participation is up. But let’s not confuse a nudge with a habit.

The million-dollar question: how much should you actually be putting into your 401(k)? Vanguard suggests a target range of 12–15% of your income, including employer contributions. Fidelity’s benchmark is a flat 15%. These numbers aren’t magic—they’re based on long-term modeling to replace about 70–80% of your working income in retirement.

But real-life planning is rarely that clean. Some workers are also saving in Roth IRAs, brokerage accounts, or have pensions or government benefits coming. Others are aiming for early retirement or want to semi-retire with freelance income. And many, let’s be honest, are still catching up from years of low earnings, debt, or life interruptions.

Financial planner Trevor Ausen puts it this way: “I don’t follow a single target savings rate across the board.” The ideal rate depends on your income, lifestyle, and retirement vision. That said, there’s one rule that almost every expert agrees on: Always contribute enough to get your full company match. Otherwise, you’re leaving free money on the table.

Let’s talk about how employer contributions actually work—because that “free money” everyone talks about? It comes with conditions. Most plans use some version of a “tiered” match. Fidelity’s most common formula: 100% match on the first 3% you contribute, and 50% on the next 2%. That adds up to a 4% total company contribution if you contribute 5% yourself.

Vanguard says the most common setup in its plans is 50 cents per dollar on the first 6% of pay—so you put in 6%, they give you 3%. The catch? You don’t get the full match unless you contribute at least that much. Put in 4%, and you’re missing out on the rest. And let’s not forget vesting schedules. Some employers don’t fully hand over that “match money” until you’ve been with the company for a certain number of years. If you leave early, you might lose part of it.

TL;DR: Read your plan’s details. The match might be there—but you’ve got to earn it.

Let’s zoom in on the people actually hitting the limit. In 2024, 14% of participants maxed out their 401(k)—that means they contributed the IRS maximum of $23,000 (or $30,500 for those 50+).

Who are these high-savers?

• Older workers (think 40s, 50s, early 60s)
• High earners
• People with long tenure at the same company
• Folks who probably aren’t juggling student debt, rent spikes, and toddler daycare

In contrast, the average employee deferral was just 7.7%. And that includes people automatically enrolled at a 3% rate.

Here’s the reality: most young or mid-career workers aren’t maxing out. That’s not a failure—it’s a reflection of real-life tradeoffs. But it also means you can’t just look at the average savings rate and assume you’re on track. You’ve got to personalize the math.

Not all 401(k)s are built equal. Some have high fees, bad fund choices, or clunky apps. Others offer low-cost index funds, auto-escalation features, and sleek interfaces that make increasing your contributions feel easy.

Questions to ask:

• Does your plan offer low-fee index funds (e.g. Vanguard, Fidelity, Schwab)?
• Is there a Roth 401(k) option (after-tax contributions)?
• Can you adjust contributions easily via app or HR portal?
• Is your match formula competitive—or stingy?
• Do contributions start immediately or after a waiting period?

Even with a solid plan, it’s worth checking if you can pair it with outside tools—like an IRA, HSA, or robo-advisor—to diversify your long-term game.

Here’s the part no one likes to talk about: millions of workers don’t even have access to a 401(k). If you’re part-time, a contractor, self-employed, or working for a small business that doesn’t offer a plan, you’re on your own.

But that doesn’t mean you’re out of options:

• Traditional IRA or Roth IRA (up to $7,000 in 2024, or $8,000 if 50+)
• Solo 401(k) if you freelance or run your own business (limit: $69,000 in 2024)
• SEP IRA for small business owners with fewer admin headaches
• Brokerage accounts for flexible, no-limit investing (but no tax break)

The key is to start somewhere. Even $50/month into a Roth IRA with a basic index fund beats doing nothing.

Let’s be honest. Most people don’t fail at retirement saving because they didn’t know the math. They fail because life gets in the way.

• A new baby.
• A job change with no match.
• A mental health dip that derails habits.
• A rent increase that eats up your cushion.

That’s why systems like auto-enrollment and contribution auto-escalation (your savings rate increases 1% every year) are so powerful. They protect you from yourself.

If you’re not on one of those systems yet, consider building your own version:

• Set a calendar reminder to bump up your contribution 1% every January.
• Use a budgeting app to reroute windfalls (bonus, tax refund) into your retirement fund.
• Pair your 401(k) with a “why”—a picture of your future that’s worth saving for.

Don’t get caught chasing a 14.3% average savings rate just because the news says that’s the number. The right savings rate for you depends on where you’re starting, what your goals are, and how steady your income feels.

But here’s a quick checkpoint:

• If your job offers a match, are you getting the full amount?
• Are you increasing your contribution each year (even just 1%)?
• Are your investments in low-fee, diversified funds?
• Do you know your projected retirement number—or at least have a rough timeline?

If you’re doing these things, you’re on track—even if you’re below the national average.

The 2024 numbers are encouraging. They reflect progress in design, automation, and participation. But the deeper story is still about inequality of access, income-based gaps in savings behavior, and a system that’s slowly improving—but still leaves millions behind.

So here’s the move: start where you are. But don’t stay there. If you’re saving 4%, try 5% next year. If your plan sucks, ask HR for a review. If you don’t have a plan at all, set up a Roth IRA and automate your first $100. Retirement isn’t a finish line—it’s a runway. And every contribution, no matter how small, extends it.