Retirement savers who use financial advice, education and digital planning tools through their workplace plans are saving more and building significantly larger balances than those who don't, according to new research from T. Rowe Price.
Participants who engage with guidance resources contribute 29% more on average and hold roughly twice the account balance of non-users, the firm's annual 401(k) benchmarking report found. Still, relatively few take advantage of the help available. Just 13.8% of participants use advice, education or planning tools on their retirement site, based on data from the company's full-service recordkeeping clients representing more than 2 million savers.
"This year's data shines a light on how personalized guidance and advice are pivotal for retirement readiness," said Francisco Negrón, head of Retirement Plan Services at T. Rowe Price, noting that ongoing economic pressures make support and planning resources increasingly important.
Savings behavior also becomes more proactive with age. Participants in their 50s and 60s are more likely to raise contribution rates and make active investment changes rather than rely on plan defaults. On average, they increase savings by 1.4 percentage points annually, outpacing typical automatic escalation features.
Catch-up contributions, however, tend to be used by those already ahead. Fewer than 2% of participants with below-average balances make catch-up contributions, compared with 15% of participants who already have above-average savings.
Beyond individual behavior, plan design plays a significant role in outcomes. Plans that offer a Roth employer contribution report Roth participation rates 30% higher, balances 29% higher and savings rates 6% higher than plans without a match, with younger workers especially likely to opt for the Roth feature.
Roughly 69% of plans offer automatic enrollment and 88% include automatic annual increases. In plans with automatic enrollment, 99% of participants either maintain or raise their default savings rate. Target-date funds also dominate as default investments, used by nearly all plans to place participants into diversified, age-appropriate portfolios.
Adoption of recent legislative changes is accelerating as well. Seventy-eight percent of plans have implemented at least one optional provision under SECURE 2.0, such as higher catch-up limits, self-certified hardships or small-balance automatic distributions. Plans that offer emergency savings features show stronger engagement, with participation rates of 76% compared with 67% for plans without them, the report said.
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