Nevin's Data "Points"

  For years now, I’ve been saying that the only thing wrong with the 401(k) system is that there aren’t enough of them. And to be fair, the past several years have largely validated that view. Indeed, Vanguard’s latest How America Saves report paints what is, on the surface anyway, a remarkably encouraging picture. Participation rates among eligible workers are near record highs. Contribution rates rose — 45% of participants increased their savings rate in 2025, contributing to an average savings rate of 12.1%, an all-time high. Professionally managed investments dominate participant portfolios. Most investors ignored market volatility entirely — and, doubtless as a result of all that — account balances reached new highs. Yes, after decades spent worrying about employees failing to enroll, hunkering down in stable value funds, or panic-trading during downturns, the modern defined contribution system increasingly appears to be functioning as designed — or, as Vanguard labels it — a...

A recent headline screamed that 401(k) savings rates have “stagnated” – but that’s missing the point. Several of them, actually. “Stagnated” in this case apparently means that the average savings rate in 2018 — both employee and employer contributions — was 10.6%, roughly the same as the 10.4% rate reported in the survey in 2004. The point seems to be that, despite roughly a decade of automatic enrollment and other plan design enhancements, Americans aren’t saving any more. That’s a perfectly obvious point to draw from those two datapoints – in this case from the recent 2019 How America Saves report from Vanguard which, while it only covers plans recordkept by Vanguard, the experience of 1,900 plans and 5 million participants in the survey always provides some interesting insights. First a couple of basics; what do you suppose the odds are that we have the same plans (and participants) in the 2004 and 2019 surveys? Exactly. So, while it may not be apples to or...