At a glance:

• Employees who engage with their retirement plan are more likely to fully utilize an employer match
• Plans with immediate vesting see stronger participation
• Clear, simple matching formulas outperform more complex ones
• Auto-enrollment boosts participation — but doesn’t guarantee savings
• Professional advice helps lead to smarter investing

Retirement plans aren’t one-size-fits-all

Retirement plans across the U.S. reflect the diversity of the workplaces that offer them. Empower’s 2025 Empowering America’s Financial Journey 4th Edition report — based on data from 6.5 million defined contribution active plan participants with data from December 31, 2024 — explores how plan design influences savings, engagement, and long-term financial outcomes across sectors and organization sizes.¹

The study moves beyond traditional one-size-fits-all approaches, analyzing how employee behavior, from enrollment and contribution rates to investment decisions, is shaped by factors such as industry norms, workforce structure, and access to tools and advice. By identifying these patterns, plan sponsors can better align features with employee needs.

Key areas of focus include engagement, savings, participation, and investing. The data shows that engaged participants are nearly 2.5 times more likely to fully utilize their employer match and twice as likely to contribute above the threshold. Immediate vesting policies are associated with higher participation, and simple match formulas outperform more complex designs. Auto-enrollment drives participation, but it takes ongoing engagement to move contribution rates higher.

Engagement: A key factor in saving more

Across income levels and industries, employees who interact with their retirement plans save more. Participants who access their accounts through digital platforms or speak with financial advisors contribute nearly 70% more than those who do not.

Among the most engaged participants, average savings rates reached 8.6% — compared to just 5.5% for unengaged participants. While higher incomes saw different savings rates, for instance, with engaged participants with incomes of $250K+ saving an average of 10.6%, compared to 8.3% for non-engaged, even those with incomes under $40K who engaged still saved an average of 8%, compared to 4.7% among their disengaged peers.

Gen X leads in overall engagement (72%), while digital-native Millennials make the most use of mobile apps. Boomers prefer phone calls, but log in more frequently for digital sessions once online.

 Source: Empowering America's Financial Journey 2025

Participants using budgeting tools and personalized dashboards posted the highest average saving rates, reaching 11% or more in some income bands. Users of financial wellness tools saw average savings of 9.3% — well above the 5.4% average for unengaged participants.

Simple plan design drives better behavior

Simplicity matters. Plans that offer a clear, easy-to-understand matching formula see stronger contribution rates. The most common and most effective? A straightforward dollar-for-dollar match. Participants in these plans tend to save more than those in plans with complex or multi-tiered formulas.

While over half of all plans offer a 5% match cap, those with higher caps of 8% or more showed the most robust saving behavior.² Participants saving at a 5% to 5.9% match cap saved 9.1% overall, while those at a 6% to 6.9% match cap saved an average of 10.1%, and those at a 10-15% match cap saved an average of 14.8%.

 Source: Empowering America's Financial Journey 2025

Auto-enrollment helps, but needs a companion strategy

Automatic enrollment is a proven way to increase participation, especially in larger plans. Plans with auto-enrollment have a participant weighted average participation rate of 86%, compared with just 37% for those without.

Higher default enrollment rates do not appear to deter participation. Plans with auto-enrollment set at 6% or more showed no drop-off in engagement or opt-out rates. Participation held steady around 89% even at higher default contribution levels.

Among smaller plans under $5M, just 15% offer auto-enrollment, and only 58% of participants engage, compared to 79% of those in plans over $500M. 

Shorter vesting schedules linked to higher participation 

Plans that offer immediate vesting tend to have higher participation, regardless of plan size. This trend holds true whether or not auto-enrollment is used. The participant weighted average was 72% among plans with one to less than three years of vesting, compared to just 59% in plans with more than five years of vesting.

Among smaller plans with under $5M in assets, fewer than 20% offer immediate vesting, compared with more than 90% of large plans with over $200M in assets.

Professional guidance and managed accounts help boost outcomes 

Access to financial advice correlates with stronger results. Participants enrolled in managed accounts showed 38% higher engagement, 27% higher average balances, and 17% stronger projected retirement income.^3,4

Currently, 14% of eligible participants are enrolled in managed accounts. Gen X and Baby Boomers are the most likely users, particularly those earning between $60K and $150K.

In addition, those with managed accounts are twice as likely to take advantage of Roth IRAs or Roth 401(k) accounts than target date fund (TDF) users and are slightly more likely than self-directed participants to invest in Roth accounts.

In sectors such as mining, utilities, and tech, managed account enrollment was notably high, reflecting possible alignment with workforce needs and plan sponsor strategy.

HSAs show strong association with saving and engagement 

Health savings accounts (HSAs) aren’t just about covering medical costs. HSA users tend to save more, engage more frequently with their accounts, and report higher retirement balances.

The average defined contribution balance and income across HSA status is $136.6K for HSA non-users compared to $177.4K for those who use HSAs. Among HSA users, one in five has more than $250K in plan assets.

 Source: Empowering America's Financial Journey 2025

Participation varies widely by plan size and industry 

Plan size plays a significant role in participant outcomes. Larger plans generally see higher engagement and participation, likely due to greater resources for education, outreach, and plan features like auto-enrollment. By sector, finance and utilities posted the highest engagement and participation rates. Industries with shift-based or seasonal work — including hospitality and agriculture — reported the lowest.

A more complete picture

The report offers a detailed look at how plan design, engagement strategies, and participant behavior intersect. While there is no universal formula, certain patterns stand out. Straightforward matching formulas, shorter vesting schedules, auto-enrollment paired with engagement, and access to advice all contribute to improved participant outcomes.

As workplace demographics evolve and financial priorities shift, plans that focus on clarity, accessibility, and meaningful engagement are more likely to see results.