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Tuesday, April 23, 2024

Empowering America’s Financial Journey


How people save, invest and get advice

About the study

Empowering America’s Financial Journey (EAFJ) provides a comprehensive and representative view of workers’ savings behavior and retirement preparations. EAFJ carefully analyzes the behavior of approximately 4 million active defined contribution participants in for-profit retirement plans with Empower Retirement as the recordkeeper. It seeks to better understand participants’ savings habits and levels of involvement with retirement planning as well as where they are turning for help. The study rounds out its analysis by also evaluating Americans’ attitudes, confidence and sentiments related to retirement and financial planning through a separate representative survey of more than 2,500 Americans.

Empowering America's Financial Journey - cover image


Download the study to learn more

Staying focused during challenging times

With Americans having gone through so many hardships over the past two years, it’s important to pause and examine how all of this has affected their financial well-being and future. Have Americans stopped saving for retirement? Are they involved with their financial and retirement planning, or are they taking a hands-off approach? Where, or to whom, are they turning for financial help?

We sought to gain insights and answers to these and many other questions by studying millions of participants in plans with Empower as the recordkeeper. We were pleasantly surprised to find that Americans are resilient, and key savings and planning metrics are trending in the right direction. We also uncovered gaps and opportunities that may help improve Americans’ financial and retirement well-being. Below are some notable findings as they relate to Americans’ retirement savings, engagement and advice and guidance.


On average, participants are saving at recommended income levels of 10% to 15% (including employer and employee contributions). They are saving 8.2% of their salary (excluding the employer match) in workplace retirement plans, and that rate has been trending upward over the past two years. We’re also seeing 85% of eligible participants contributing to their plans, a strong recovery from pandemic lows. Other significant findings include:  

  • The majority of working Americans are optimistic about their savings. More than half of workers surveyed (three of five) believe they are saving enough in their 401(k) plan accounts.
  • Gen Zers are on the right savings track. Gen Zers have the highest percentage of participants contributing to 401(k) plans, not Gen Xers or baby boomers, who are closer to retirement.
  • Millennials are leading the way in Roth adoption. One in five participants are contributing to a Roth 401(k) when offered, and millennials have the highest penetration rate (24%) across generations. Roth savers are also engaging and saving at notably higher rates than those not contributing to a Roth 401(k) (10.2% vs. 7.9%).

Although participants on average are on the right retirement savings track, there are still opportunities to help those who may be falling short. This is evident given that 69% of workers in nearly all generations say they wish they had started saving earlier. Some areas for improvement are highlighted below.

  • There is an income savings divide. A lack of discretionary income is likely hindering many Americans’ savings ability. Participants with incomes of less than $60,000 are saving at a 57% lower rate than those with incomes greater than $120,000.
  • Gender savings gap still exists: Compared to men, women are saving less (7.9% vs. 8.5%), and they feel less confident they are saving enough in their 401(k) accounts (49% vs. 64%). On a positive note, women with incomes greater than $60,000 are saving at slightly higher rates than men.
  • Budgeting and debt challenges are impacting savings rates: Of the 36% of Americans who feel they are not contributing enough to their 401(k) accounts, 53% say they need to make ends meet, followed by 42% who say paying off debt is holding them back.


Retirement and financial-planning engagement can lead to many positive outcomes. Over the past 12 months, two-thirds of participants (67%) engaged with their retirement accounts and finances.

Our research found that engaged participants, when compared to unengaged participants:

  • Save around 61% more (9.2% vs. 5.7%).
  • Are more confident about saving enough in their 401(k) plans (63% vs. 28%).
  • Rate themselves higher when it comes to financial knowledge (44% vs. 15%).

Participants with more frequent web interactions also have higher savings rates. Savings rates for participants with 6-10 web interactions are more than 50% greater than those with no web interactions (9.7% vs. 6.0).

Automatic features

Engagement and savings rates vary depending on how participants enroll in a plan. Participants in plans without auto-enrollment have higher engagement and savings rates than those in plans with automatic features. Despite participants who are in plans without auto-enrollment having higher engagement and savings rates, more participants in plans with auto-enrollment tend to think they are saving enough than those without auto-enrollment (71% vs 58%).

Automatic enrollment and escalation are foundational plan design features needed to help expand plan participation and overcome enrollment inertia. But because automatic features aren’t designed to drive active participant engagement, they should also be offered with personalized and relevant communications and campaigns focused on boosting participant plan involvement. Part of the problem could be that participants may view saving at a default savings rate or meeting the employer match as an indication they are doing enough. In fact, more than six in 10 workers say their savings rate is either based on the employer match or automatically set by the plan.

Advice and guidance

Americans’ financial journeys are unique in nature and come with diverse challenges. With less than half of Americans (48%) feeling comfortable making investment decisions, personalized guidance and advice can help them along the way.

Americans are more comfortable making an investment decision when they:

  • Work with an advisor (61% vs. 39%). 
  • Use online advice (62% vs. 39%).
  • Receive advice over the phone (69% vs. 40%).

Seeking advice

Americans seek professional advice for different reasons. Seeking advice initially is less event driven than savings driven. An increase in income or savings (39%) and accumulating a certain amount of savings (38%) are the most common reasons for individuals to first seek professional advice. That compares to a major life milestone (26%), such as purchasing a home or having a child.

As participants get older, participant usage of target date funds declines as do-it-yourself approaches increase. The proportion of participants using target date funds flattens out around age 54, when a do-it-yourself (DIY) approach surpasses target date fund usage slightly. Coinciding with this shift, advice usage increases and is likely tied to participants being closer to retirement and focusing on the challenges associated with retirement. Working with advisors and increased utilization of guidance tools are important factors driving rising DIY approaches.

Participants who are engaged, leverage educational content, and/or seek out advice or guidance have higher savings rates than unengaged participants. Each of these interactions and services builds on the other, and participants taking advantage of a combination of these resources have incrementally higher savings rates. 

Helping Americans move forward along their financial journey

These and other findings provide a window into Americans’ financial and retirement savings habits and readiness. Informed by these insights, these five tips can help put Americans in a better position to meet their financial and retirement goals.

  1. Stay focused and get engaged; achieving financial health is a journey.
  2. Retirement plan enrollment is a starting point; build upon it.
  3. Build financial confidence by creating a plan and being in the know.
  4. Financial and retirement help comes in different shapes and forms; find what works for you.
  5. Professional advice is a foundational pillar to help improve financial well-being; don’t be afraid to seek it.
Empowering America's Financial Journey - cover image


Download the study to learn more

Empower analysis of 3.92 million active participants recordkept at Empower and 2,508 working Americans between the ages of 18 and 70 conducted from September 21 to October 11, 2021.

Securities, when presented, are offered and/or distributed by Empower Financial Services, Inc., Member FINRA/SIPC. EFSI is an affiliate of Empower Retirement, LLC; Empower Funds, Inc.; and registered investment adviser Empower Advisory Group, LLC. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice. Investing involves risk, including possible loss of principal. If discussed, past performance is not a guarantee of future results. Asset allocation, diversification, dollar-cost averaging and/or rebalancing do not ensure a profit or protect against loss. Risks associated with investment options can vary significantly and the relative risks of investment categories may change under certain economic conditions.

Empower and its affiliates are not providing impartial investment advice in a fiduciary capacity to the plan with respect to this material. The plan fiduciaries are solely responsible for the selection and monitoring of the plan’s investment options and for determining the reasonableness of all plan fees and expenses. Empower may receive revenue sharing type payments in relation to third-party investment options and affiliated investment options, Empower Funds and Putnam Funds. Please contact your Empower representative for more information.

There is no guarantee provided by any party that participation in any of the advisory services will result in a profit. Online advice and the managed account service are part of the Empower Advisory Services suite of services offered by Empower Advisory Group, LLC, a registered investment adviser or by the named registered investment adviser as defined by the advisory services agreement.

“EMPOWER” and all associated logos and product names are trademarks of Empower Annuity Insurance Company of America.

©2022 Empower Retirement, LLC. All rights reserved.

GEN-SPP-WF-1344152-1121 RO1917065-1121