American employers are doing more to help their workers save for retirement.
When companies set up 401(k) plans, they often pitch in some money to encourage their employees to save. As this data visualization shows, how much employers match employee contributions can vary quite a bit. Large companies typically match the first 3 percent to 5 percent of salary that an employee contributes to a 401(k). While many small companies pitch in nothing at all, other companies are far more generous: ConocoPhillips puts in 9 percent for the first 1 percent that its workers contribute.
After the 2007-09 recession, companies got stingier with retirement money. Since then, though, employer matches have gradually crept higher. New data from Fidelity Investments, the U.S.'s largest retirement plan provider, show that employers' contributions are now at a record high.
The average employee in a Fidelity plan is getting $3,620 per year in her 401(k) from her employer. That's 30 percent higher than eight years ago and 15 percent higher after accounting for inflation.
Last quarter, Fidelity data show, companies matched contributions at a rate of 4.4 percent of salaries per year. That's the second-highest on record, after a 4.5 percent rate in the first quarter of 2014. Contribution rates often spike in the first quarter of the year, Fidelity director Meghan Murphy says, because that's when profit sharing and other annual 401(k) contributions are often paid.
Defined-contribution 401(k) plans still aren’t as generous as many of the defined-benefit pensions that have disappeared at large companies over the past few decades. And about half of private sector workers don't have retirement plans at work at all.
But more generous 401(k) plans are definitely good news for Americans’ retirement savings. Generally, Fidelity recommends that workers contribute 10 percent to 15 percent of their annual salary to a retirement plan. Employees are pitching in 8.1 percent per year, on average, an amount that’s holding steady. But the rising employer match is bringing savers into the recommended range, up to 12.5 percent.