Although the average, and even more dramatically the median, amounts of assets held in Vanguard defined contribution plans are low, both numbers are rising and may not paint as bleak a picture as appears at first glance.

The median amount of money held in retirement accounts is only $26,926 while the average is $79,077 according to data collected by Vanguard about Vanguard accounts as of the end of 2010 in the study, How America Saves 2011. Vanguard has been tracking participation in retirement plans for each of the last 10 years, although not all data is available for all years.

Despite the market decline, the median assets in Vanguard defined contribution plans has risen from $15,388 in 2001 and the average has risen from $47,513 over the last decade, according to the study. Contrasting the current rate to the end of the year 2007, both asset amounts have risen 31%.

Steve Utkus, coauthor of the report along with Jean Young, senior research analyst, acknowledges, "Account balances have been cited as too low to be helpful in retirement." However, he notes, the typical participant in a Vanguard account is a 46-year-old male who is saving at 8.8% with 20 to 25 more years to work," which acknowledges that most people have accepted the fact they will have to work longer than originally anticipated.

Plus the Vanguard retirement account probably is combined with Social Security, other savings, spouse's retirement plans and possibly retirement plans from companies the person worked for earlier in his other career.

"Even though we encourage people to save more (than the 8.8%), ideally at least 12% to 15% of their income, the reality is that many participants may be on target for retirement," Utkus concludes.

Among the other trends that have emerged is the plan participation for individual employees is higher at smaller companies, while having automatic enrollment policies is higher at larger companies. Vanguard has about 2,000 defined contribution plans and 24% have adopted automatic enrollment, up 3 percentage points from 2009. But the plan participation rate is 74%, down 2 percentage points since 2009, probably caused by the poor economy, Vanguard says.

Although the average contribution rate of 6.8% remained the same between 2010 and 2009, it was down from a high of 7.3% in 2007, and again Vanguard says it is probably due to the economy. The average default rate for automatic enrollment plans of 3% is set too low, the study adds.

An encouraging aspect of the data that was gathered shows more plan participants are opting for automatic professionally managed investment programs, so that professionals are managing the accounts. This eliminates portfolio construction mistakes made by many participants left on their own, the report concludes.

By the end of 2010, 29% of Vanguard participants were entirely invested in managed programs, including target date or balanced funds or managed account services. Many plans also offer advice services and when the numbers of employees utilizing these services is included, more than 40% of plan participants are taking advantage of investment management programs or advice services, the study shows.

On the down side, 18% of participants had an outstanding loan at the end of 2010, and the number of hardship withdrawals rose 47% during 2005 to 2010 with the number reaching 2.2% in 2010.

At the same time, 70% of participants who left their employer in 2010 and were eligible for a distribution, preserved their plan assets for retirement by remaining in the plan or rolling over the savings to an IRA or new employer plan.

The study was based on Vanguard's 3,000,000 participants in more than 2,000 qualified defined contribution plans.

-Karen DeMasters