2024 was a milestone year for 401(k) plans. ERISA, the legislation that effectively laid the groundwork for the growth of defined contribution plans like 401(k) and 403(b) plans, turned 50. The participation rate for defined contribution plans across all private industry workers reached 50% for the first time. And, early data from Vanguard’s annual How America Saves report shows that employers helped workers save and invest more than ever before.
Last year, 401(k) plan account balance averages increased by 10%, driven primarily by positive market performance. It would be tempting to dismiss improvements in workers’ savings and investing behaviors as merely a reflection of strong market performance and good luck. However, reflecting on the past 10 years of 401(k) plan data provides evidence that the progress employers, policymakers and recordkeepers have made to improve workplace retirement plans is having its intended effect, steadily and consistently improving behaviors and outcomes for workers.
