401(k) Savings Hit Record 9.6% of Pay, But Age and Income Still Split the Field

Inside the Record 9.6% 401(k) Savings Rate

Americans with 401(k) accounts are setting aside a record share of their pay for retirement. Workers contributed an average of 9.6% of their salary in the second quarter of 2026, according to Fidelity, and once the average employer contribution is added, the total savings rate reaches 14.4% — close to the 15% benchmark many financial planners recommend.

But that headline number hides wide variation. Vanguard, which tracks a different set of plans and reports a lower combined average of 12.1%, shows savings rates climbing steadily with age: participants under 25 save 9.6% of salary in combined employee and employer contributions, while those aged 55 to 64 save 13.7%. The pattern reflects life stage as much as discipline — younger workers are often juggling student loans, home purchases and family costs while earning less, whereas older workers tend to prioritize retirement as it approaches.

Income matters just as much. Including employer contributions, workers earning under $15,000 a year saved an average of 10.8% of income in 2025 — more than the 9.6% saved by those earning $30,000 to $49,999 — while those making $150,000 or more saved the most, at 14.2%. That low-income figure comes with a caveat: it counts only workers who actually contribute. When eligible workers who don't participate are included, the average for the under-$15,000 group falls to just 4.8%.

Reaching the annual maximum remains rare. Only 14% of participants contributed the maximum in 2025, though about half of those earning $150,000 or more did. For many households, the 15% target is simply out of reach: roughly 37% of adults could not cover an unexpected $400 expense entirely with cash, according to the Federal Reserve's 2025 household survey.

Why Auto-Enrollment, Not Willpower, Is Driving the Numbers

Auto-Enrollment Is Doing the Heavy Lifting

The most consequential detail in the data is not the record 9.6% rate itself but what is producing it. Vanguard's data shows that plans which automatically enroll new hires and gradually escalate contribution rates post far higher savings rates than plans where workers must opt in. That means a meaningful share of the improvement in national retirement savings is a design outcome, not a behavioral one — employees are defaulting into better habits rather than choosing them. For employers, this is a low-cost lever: plan design changes can lift participation and contributions without raising compensation costs.

Where the Income Gap Actually Bites

The income breakdown contains a counterintuitive wrinkle. Workers earning under $15,000 who do contribute save 10.8% of income — more than the 9.6% saved by those earning $30,000 to $49,999. But once non-participating eligible workers are counted, that same low-income group drops to 4.8%. The gap between those two figures is the real story: it is not that low earners save less when they participate, it is that far fewer of them participate at all. Middle-income workers, meanwhile, face a squeeze where contribution rates dip before climbing again at higher incomes.

Why the 15% Target Is Out of Reach for Many

The 15% rule of thumb assumes disposable income that a large share of households do not have. With 37% of adults unable to cover a $400 emergency with cash, retirement saving competes directly with short-term liquidity needs — and short-term needs usually win. The practical implication is that for lower-income workers, the highest-return move is often capturing the full employer match first, since many employers chip in 3% to 7% of salary and most workers need to save only 5% to 7% of pay to maximize it. Fidelity data shows about 80% of workers are already doing so.

What This Means for Plan Sponsors and Policymakers

For context, the retirement industry has spent the past decade shifting toward automatic plan features, and this data is one more data point confirming that shift works. The remaining policy question is what happens to workers at employers that still offer opt-in-only plans, or no plan at all — a group not captured by either Fidelity's or Vanguard's figures. Tax credits like the earned income tax credit and the retirement savers' credit, which CFP David Tenerelli highlights, are targeted at exactly this gap, though uptake depends on filers actually claiming them.

What Workers Should Do With These Numbers

The single most important insight: if you are not capturing your full employer match, that is the first dollar to fix — most workers need to save only 5% to 7% of pay to get it, and roughly 80% already do.

• Check your match formula now. Many employers contribute 3% to 7% of salary. Contributing below the match threshold leaves guaranteed money on the table.
• If you are auto-enrolled, check your escalation rate. Plans that automatically increase contributions over time are a major reason savings rates have risen — confirm yours is on and set to a rate you can sustain.
• Lower earners: claim the credits. The earned income tax credit and the retirement savers' credit can free up cash to fund contributions. Free filing tools and the IRS's Volunteer Income Tax Assistance program can help you claim them.
• Do not benchmark yourself against the 14.4% average if you are under 40. Vanguard data shows under-25s at 9.6% combined — the average is skewed by older, higher-earning savers.
• If cash reserves are thin, sequence matters. With 37% of adults unable to cover a $400 surprise, building a small emergency buffer alongside the match may be more realistic than chasing 15% immediately.

Watch next: Fidelity's Q3 2026 contribution data for whether the record rate holds, and any 2027 IRS contribution-limit announcement that changes what 'maxing out' means.