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Companies are now auto-enrolling new hires into 401(k) plans at 6% of their salary, up from 3%, to boost savings and maximize employer matching contributions, improving retirement readiness without significantly increasing opt-out rates.
New hires are putting more of each paycheck into their 401(k). Not necessarily by choice. Nearly a third of companies that use automatic 401(k) enrollment now start workers saving at 6% of their salaries or higher, about double the share of organizations that did so a decade ago, according to Vanguard Group. A default 6% contribution rate was once considered too onerous for younger workers and too paternalistic by those who favor leaving decisions to individuals. “Initially, many companies defaulted people into the 401(k) at 2% or 3% of pay and that’s where many stayed,”
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