“Because of the growing use of target-date options,” the report continued, “we anticipate that by 2021 three-quarters of Vanguard participants will be solely invested in an automatic investment program.”
The report said the average contribution rate last year, taking into account both employee and employer contribution, was 10.9 percent and the median was 10 percent. These savings rate have remained stable for the past few years, the study said.
The report said that optimal retirement saving rates are about 12 percent to 15 percent Still, Young said these rates were good, but not ideal.
“Yes, some of these higher paid people need 12 percent or 15 percent or more. But if we had everyone in the United States saving 10 percent for retirement, we wouldn’t have nearly as much of this dialogue about people not saving enough for retirement.”
Vanguard works with some 8,500 plan sponsors and some 4.6 million plan participants.