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The average 401(k) savings rate hit a record — here’s why it’s rising


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How much to save for retirement

“The 15% is just a goalpost,” with the understanding that everyone’s situation is different, said Mike Shamrell, vice president of thought leadership for Fidelity’s workplace investing. 

The right retirement savings rate depends on your age, expected retirement date, cash flow, projected Social Security income, pensions and retirement plans, among other factors.

However, “if you can’t reach that 15%, at least try to contribute [enough] to get your full company match,” Shamrell said.

If you can’t reach that 15%, at least try to contribute [enough] to get your full company match.

Mike Shamrell

Vice president of thought leadership for Fidelity’s workplace investing

The most common match formula for Fidelity plans is based on a 5% contribution rate with a 100% match on the first 3% of employee deferrals and a 50% match on the next 2%. In other words, if 5% is $100, the company would match $80, Shamrell said.

“We have target savings rates of 10% to 30% depending on the household,” said certified financial planner Andrew Herzog, an associate wealth advisor at The Watchman Group in Plano, Texas.

For example, a 20-year-old barely making ends meet may struggle to save 10%, whereas a 50-year-old couple may need to stretch their savings rate to 20% to reach their target retirement dates, he said.

401(k) savings rates are increasing

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About 78% of 401(k) plans that auto-enrolled employees also had auto-escalation in 2022, according to a yearly survey from the Plan Sponsor Council of America.

After combining those factors, “you start seeing some really positive trends in terms of savings rates,” Shamrell added.



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