• In 2023, the average 401(k) savings rate, including employee deferrals and company contributions, was 12.7%, up from 12.1% in 2022, according to the Plan Sponsor Council of America.
• While Vanguard recommends a combined savings rate of 12% to 15%, Fidelity Investments says investors should aim for 15%.
• If you can't reach those percentages, you should defer at least enough to get your employer's full matching contribution, experts say.

The average 401(k) savings rate, including employee deferrals and company contributions, continued to climb in 2023, a new industry survey reported.

In 2023, the average combined savings rate was 12.7%, up from 12.1% in 2022, with employees deferring 7.8% of pay and companies adding 4.9%, according to the Plan Sponsor Council of America's yearly survey of more than 700 company 401(k) and profit-sharing plans.  

"The deferral rate has been trending up over time," with dips during economic downturns, said Hattie Greenan, director of research and communications for the Plan Sponsor Council of America.  

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Meanwhile, Vanguard reported the average combined savings rate was an estimated 11.7% in 2023, which matched the figures from 2022, according to the company's yearly analysis of more than 1,500 qualified plans and nearly 5 million participants.

Fidelity Investments, which reports retirement savings rates quarterly, estimated the combined savings rate was 14.1%, as of Sept. 30, 2024, based on an analysis of 26,000 corporate retirement plans.

How much to save in your 401(k)

Vanguard recommends saving 12% to 15% of your earnings every year, including employer contributions, to meet your retirement needs. The combined savings benchmark for Fidelity is 15%.  

Typically, companies match employee deferrals up to a specified limit — and you should aim to contribute at least enough to get the full match, said Greenan from the Plan Sponsor Council of America.

"That's really going to add up over time," she said. 

More than 80% of plans included a matching contribution in 2023, according to the Plan Sponsor Council of America report.

After hitting the match, some experts suggest boosting your deferrals every year, but "you're going to see growth from whatever you can afford to contribute," Greenan said.

Starting in 2025, the 401(k) maximum employee deferral will jump to $23,500, up from $23,000 in 2024. The 401(k) catch-up contribution will remain $7,500 for workers 50 and older, but increases to $11,250 for investors aged 60 to 63. 

If you're planning to save more in 2025, right now is "an important time of the year" to boost deferrals, said certified financial planner and enrolled agent Catherine Valega, founder of Boston-area Green Bee Advisory. 

Typically, it takes a few paychecks until your 401(k) deferral updates go into effect, so it's better to make changes in December to be ready for January, she said. 

Only 14% of employees maxed out 401(k) plans in 2023, according to Vanguard's annual report. On top of maxed-out contributions, an estimated 15% of workers made catch-up contributions in plans with the feature, the same report found.