Sometimes inertia helps: More workers save in their 401(k)

Workers are more likely to be saving for retirement, at least among those eligible for a workplace plan, and lower-income employees have made some of the biggest gains in recent years.

Those are two of the encouraging trends borne out of numbers from Vanguard, which looks each year at how participants are behaving in 401(k) plans and similar retirement accounts for which it keeps records. Vanguard is one of the nation's big record keepers, working with 4.4 million participants in defined-contribution plans.

The outlook for retirement in the country is by no means cloudless: Many workers, particularly those in low-income households, still have no access to a 401(k) plan or similar account. And among those who do, experts say savings levels broadly still aren't high enough to guarantee that most households will be able to maintain their standard of living in retirement. But some signs point to progress. Here's a look at some of the trends found from Vanguard's survey , up and down:

— Workers are more likely to be saving.

Across Vanguard's plans, 79 percent of all workers eligible to save in a 401(k), 403(b) or similar account are doing so. That's up from 68 percent a decade ago, and a big reason for it is that workers are getting a more forceful push to do so.

Nearly half of employer plans, 45 percent, sign their workers up automatically for the retirement plan. That's triple the rate from 10 years ago. Workers still have the choice to opt out, but requiring that extra step means more end up saving, and it's another example of trying to use inertia to help. Only 10 percent of workers in plans with automatic enrollment aren't participating, versus 37 percent at plans where signing up is voluntary.

Most typically, employers are enrolling workers to contribute 3 percent of their pay. Not only that, many have also set their programs to automatically raise workers' savings rates each year. Most increase contributions by 1 percentage point, most typically up to a cap of 10 percent.

— Lower-income workers are seeing the biggest increases in participation.

Workers pulling down big paychecks have always been the most likely to save in a 401(k). More than 90 percent of workers making $100,000 or above participated in their plan last year, the same as it's been through the past decade.

The story hasn't been so good for lower-income workers, who likely feel less comfortable diverting some of their paycheck. A decade ago, for example, only 45 percent of workers making less than $30,000 annually participated in their plan. That was less than half the rate of the highest-paid workers.

But the participation rate for lower-income workers has been steadily climbing in recent years, and hit an estimated 65 percent last year. So while they still participate less often, the gap between how much lower-income workers participate and how much other groups do is narrowing.

— Younger workers are also more likely to save than before.

Odds are only slightly better than a coin flip that a young employee under the age of 25 is setting aside some pay in a 401(k) or similar plan.

Last year, an estimated 54 percent of such eligible workers were doing so. But that's a much higher rate than a decade ago, when only 38 percent of them were.

Older workers have also made gains, but not at the same rate. Those aged 35 to 44, for example, have seen participation rates rise 7 percentage points to 77 percent, compared with the 16 point gain for the youngest workers.

— Workers' portfolios are better balanced.

Having too much of anything can be dangerous. Experts warn against keeping too much of a 401(k) in stocks, because they have the potential to drop sharply on any day. At the same time, they warn against not having enough in stocks, because they have traditionally provided the best growth over the long term.

Vanguard has seen portfolios pull closer to the middle over time, and away from the extremes. Just 6 percent of participants last year had all of their 401(k) or similar accounts entirely in stocks, roughly a third of the rate from a decade ago. Much of the credit goes to target-date funds, which have become the investment of choice for employers automatically enrolling workers in the plan.

These kinds of mutual funds own a mix of stocks and bonds, and they shift over time to become less risky as the target retirement date approaches. Nearly half of all Vanguard's participants, 46 percent, had their entire accounts in just one target-date fund.

— Savings rates are down a bit.

The typical participant set aside 5 percent of their pay last year, meaning half of them were saving more than that, and half were saving less.

That's down from a median rate of 6 percent the prior year, and Vanguard attributes that in part to the rising number of workers getting automatically enrolled into plans. Many of them are saving at the default 3 percent rate.