Vanguard recently researched generational changes in 401(k) behavior. Among the key findings:

The overall participation rate of employees increased from 62% in 2006 to 82% in 2021, largely because more plans have adopted automatic enrollment. Generation Z's participation rate was more than twice as high as similarly aged employees in 2006.
Overall, eligible employees deferred nearly 40% more in 2021 than in 2006. Employees across all generations saved more in 2021.
Professionally managed allocations (via target-date funds) and advice have significantly improved age-appropriate equity allocations for all generations. In 2006, nearly one-quarter of participants ages 18 to 24 had no equity exposure. In 2021, 97% of automatically enrolled Generation Z participants had an equity allocation between 41% and 99%.

"This research shows us that the rising adoption of auto enrollment and target date funds have been huge innovators in retirement wealth accumulation across all generations, but especially for younger participants," said Dave Stinnett, head of strategic retirement consulting for Vanguard. "Automatic enrollment, combined with target date fund adoption, has played a significant role in altering retirement savings behavior for the better. Today's Gen Z employees save more than twice as much, as a percentage of pay, when compared to young employees in 2006, and millennials save 65% more. This is helpful in showing how behaviors have changed, largely through auto enrollment designs."

Instant Insights /

Better wealth-building behaviors: Gen Z is killing it when it comes to 401(k) savings

More From HR Executive

Related Stories

Recommended For You