401(k) participants boosted their savings rates to an all-time high last year, according to the Plan Sponsor Council of America's 65th Annual Survey of 401(k) and Profit-Sharing Plans released Tuesday.
In 2021, while still in the thick of the pandemic, participants contributed an average of 8.3% to their workplace retirement plans, up from 8% in 2020 and up from 6.7% in 2012.
Employer contribution rates also hit record levels. In 2021, employers contributed an average of 5.6% to their workers' retirement accounts, up from 4.9% and 4.5%, respectively, in 2020 and 2012.
"As the nation emerged from the impact of the COVID-19 pandemic, benefit programs generally, and retirement savings programs particularly, were seen as a key employment differentiator," said Hattie Greenan, PSCA's director of research and communications, in a news release. "With the support and encouragement of employer contributions, workers responded in kind, enhancing their long-term retirement security."
A decline in plan distributions provided additional good news. In 2021, 1.9% of participants took a hardship withdrawal, down from 2.6% in 2020. Fewer participants also borrowed money against their retirement accounts in 2021, with 18% doing so, down from 23.6% in 2020.
The survey is based on 557 401(k) and profit-sharing plans for the 2021 plan year.
