Vanguard for over a decade has been providing valuable data on retirement plan participant trends, based on its own client base. The latest edition, How America Saves 2014: A Report on Vanguard 2013 Defined Contribution Plan Data, for the most part shows steady progress. A few of the highlights:
What we see from the Vanguard data is a growing, strong preference by many participants for assistance in getting them to a better place in saving for retirement. Most participants recognize that they are not financial experts. The professionally managed and auto-enrollment data would appear to reconfirm that as well.
- The 2013 median account balance was $31,396, while the average was $101,650. Since 2008, both the median and average account balances have improved by about 80%, mostly reflecting the market rebound. For continuous participants over the 2008-2013 stretch, the median improved by 182%.
- There has been significant growth in the use of professionally managed investments. In 2008, some 22% of participants used a single target-date or balanced fund, or a managed account advisory service. This rose to 40% in 2013. For those joining the plan in 2013, three out of four opted for the single, professionally managed option.
- 60% of new participants in 2013 were enrolled via automatic enrollment. Virtually all auto-enrollment plans chose a balanced investment strategy (98%), with 90% using a target-date fund as the default.
- Loan activity was relatively flat.
- For participants who could have taken a distribution in 2013, 85% left the assets in the employer's plan or rolled them over to an IRA.
What we see from the Vanguard data is a growing, strong preference by many participants for assistance in getting them to a better place in saving for retirement. Most participants recognize that they are not financial experts. The professionally managed and auto-enrollment data would appear to reconfirm that as well.
