Millennials are saving more in their 401(k) plans, despite popular perceptions of the age group as not being a bunch of savers.

That’s according to a new white paper from Vanguard, which also found that millennials are putting more money into equities despite their perception as equity-averse.

Read: Are advisors avoiding millennials?

But before millennials get too much credit for being savvy savers and daring investors, context needs to be considered.

The white paper, “The auto savings generation: Steering millennials to better retirement outcomes,” pointed out that participation rates, saving rates and equity allocations for millennials (those aged 18–34) have been rising over the last 10 years in defined contribution (DC) plans.

That’s despite the havoc that the Great Recession wreaked on the job market and income potential for that age group in particular.

Read: Millennials choose--annuities?

But—and it’s a big but—“the advent of automatic plan design features and the increasing adoption of target-date funds have put millennials on the right path to retirement readiness,” the paper said.

In 2013, millennials had a higher 401(k) participation rate than did participants in the comparable age group back in 2003. But that’s largely because of plans designed to feature automatic enrollment, the paper said.

Vanguard plans that have auto enrollment, it reported, saw 87 percent of millennials participating in 2013.

That’s a whopping 70 percent higher than the comparable age group back in 2003. “With the continued evolution and improvement of DC plans,” said the white paper, “millennial investors are the first generation with access to automatic plan features from the beginning of their working years.”

And it shows. The “set it and forget it” features of auto enrollment and target-date funds have kept millennials better on track than they would be if left to their own devices.

“Median equity allocations rose to 89 percent in 2013,” the paper said, “up from 82 percent in 2003, primarily due to climbing adoption of target-date funds.”

Instant Insights /

Millennials saving in 401(k)s thanks to auto-enrollment

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