Automatic 401(k) Enrollment Increases Participation
According to a recent Hewitt survey, we are now beginning to see the effects of automatic 401(k) enrollment. In 2004, "participation by workers who had less than a year on the job rose to nearly 36 percent in 2005 from 30 percent in 2004. It attributed the increase to more companies automatically enrolling newcomers."
Despite this increase in enrollment, the survey tells us some other interesting points about 401(k) enrollment. First, about 22% of participants don't even contribute enough to obtain an employer match. Only about 30% contribute just enough to obtain the match.
In addition, here were the average 401(k) balances, for various age groups: those 20-29 had saved an average of $10,640, those age 30-39 had $39,470, those 40-49 had $86,990 those 50-59 had $126,980, and those 60 and older had $108,950. I suppose that this must also be influenced by employee tenure - those with their employers longer are likely to have saved more. Even still, better start saving!