Ascensus’ Annual Savings Trends Research Reveals How Individuals Are Saving for Their Financial Futures
Ascensus—whose technology and expertise help millions of people save for retirement, education, and healthcare—released new insights across its universe of retirement, education, and health savings accounts (HSAs) on its Inside America’s Savings Plans microsite. As the nation’s largest independent recordkeeping services provider and government savings facilitator, Ascensus offers a unique, comprehensive perspective into how Americans are saving for the future.
Ascensus analyzed data across a population of over 88,000 retirement plans and 280,000-plus consumer-directed healthcare accounts as of 2018 year-end. The firm also highlighted HSA industry data from Devenir, a provider of customized investment solutions for HSAs and the consumer-directed healthcare market. The following themes provide insights into how savers are engaging with these tax-advantaged savings vehicles.
Plan sponsors and savers see the value in automatic savings models.
401(k) plans designed with automatic enrollment and automatic escalation features saw an average plan-weighted participation rate of 81 percent, which was 10 percentage points higher than that in plans without automatic enrollment.
According to Devenir, 26 percent of all HSA contributions came directly from an employer and 56 percent came from an employee through their workplace in 2018. By pairing HSAs with high deductible health plans and enabling payroll direct deposit, employers can help employees build a foundation of health savings.
Changing financial and market landscapes are influencing individuals’ savings strategies.
Ascensus’ 401(k) platform data highlights that individuals under 25 years old are saving at lower savings rates than those in older age groups, which suggests the need for further investigation into the impact of competing financial priorities, including student loan debt. However, there is a notable, positive difference in progress for savers between 25 and 34 years old: Of all retirement savers on Ascensus’ platform who found that they are “on track” to meet their goals, 20 percent of them are between 25 and 34 (versus just 3 percent for the under-25 age group).
Healthcare expenses continue to increase exponentially, with the Employee Benefit Research Institute (EBRI) reporting that the average couple will now cumulatively need $399,000 for a 90 percent chance to cover their healthcare expenses in retirement. Heightened awareness for these staggering costs and the increasing popularity of high deductible health plans have driven HSA enrollment to new highs. There are currently over 25 million HSAs held by savers across the U.S. with a combined $53 billion in assets.
“We’ve seen a shift in the way that individuals across different life stages are saving for themselves and their families,” said David Musto, president of Ascensus. “To continue to address the savings deficit millions are facing, our industry needs to focus on offering tools and resources that make it quick, simple, and automatic for savers to track their progress.”
“Employers, state governments, and financial advisors will continue to play an integral role in encouraging individuals to make the most of the savings vehicles and tools available to them,” Musto concludes.
