Wells Fargo & Co., of San Francisco, says the percentage of employees participating in 401(k) plans administered by the company has been growing in recent years. 

The number of eligible employees participating in Wells Fargo-administered plans rose 13 percent between 2011 and 2015.  

Wells Fargo says it administers 401(k) plans for 3.8 million eligible participants employed by U.S. companies. The increase in participation correlates to an increase in plan sponsors opting for automatic enrollment of their participants, which now stands at 40 percent of Wells Fargo-administered plans, up from 30 percent in 2011.

The data show increasing participation rates among younger employees, new hires, and lower-earning workers during the past four years. 

Participation in the 401(k) plan among millennials has reached 55 percent, compared with 45 percent in 2011. For newly hired eligible employees, meaning those who have reached the one-year mark of employment, participation has increased from 36 percent four years ago to 48 percent in 2015. In addition, employees in a pay range of $20,000 to $40,000 in salary are participating at a rate of 59 percent, versus 47 percent four years ago, the company says.

“This is a great set of data demonstrating some very positive behaviors from participants,” says Joe Ready, head of Wells Fargo Institutional Retirement and Trust, adding, “I get very excited when I see the percentage of employees enrolling in plans ticking up over the last four years because it tells me people understand that participation in their workplace retirement plan is vital.”

Ready says, “We know that systematic, pre-tax savings and investing works. The first critical step along that journey is to get people in the plan. In addition, to see such gains among people who are historically the hardest to get saving for retirement is also quite encouraging. People are getting the message that their 401(k) is an important key to a viable retirement.”

Although participation rates are rising, the deferral rates are relatively flat in the four-year analysis, with 38 percent of participants saving a minimum of 10 percent of their salary, which may include employer match, in their 401(k) plan. That’s a modest increase from 34 percent four years ago. Twenty-eight percent of millennials currently reach a total contribution of 10 percent of pay, compared to 35 percent of generation X and 45 percent of baby boomers.

Sixty-two percent of all active participants are taking full advantage of their employer match. When analyzed by generational groups, this breaks down to 54 percent of millennials, 63 percent of generation X, and 70 percent of boomers who are contributing enough to capture their full company match.

The average 401(k) balance is $93,015, up from $69,802 four years ago, largely due to gains in the stock market.

The number of people with a loan from their 401(k) has remained flat; 19 percent have at least one loan.

“Participating in the plan is the first step, but what we really need to see is a more robust increase in how much people are saving,” Ready says.

“The reality is that people need to save their way to retirement. This is true for all generations, and especially so for the younger population that has time on its side and can take advantage of the compounding effect of time,” he says. “At the very least, we like to see people reap the full benefit of their employer match because that’s a nice boost for their savings that doesn’t come out of their pocket.”

The Roth 401(k) usage is creeping up, with 12 percent of participants contributing to a Roth 401(k) compared to 8 percent four years ago. Millennials are the most significant users of Roth, with 16 percent contributing to a Roth 401(k), versus 11 percent of gen X and 7 percent of boomers. The Roth 401(k) enables participants to contribute after-tax dollars and withdraw in retirement on a tax-free basis.

“The decision to contribute after-tax money to a Roth 401(k) is an intentional one, because people typically are not automatically enrolled into Roth 401(k) plans,” Ready says. “I am encouraged that the younger participant group is putting thought into what can be a tax diversification strategy when it comes time to take money out of plans in retirement.”

Roth 401(k) usage isn’t the only category in which millennials have gen X and boomers beat. Millennials are still the most diversified generation and are making the biggest gains: 82 percent are meeting a minimum level of diversification—a minimum of two equity funds and a fixed-income fund and less than 20 percent in employer stock, which is up from 72 percent four years ago. Gen X and boomers also have seen strong gains in this category, with 78 percent and 75 percent, respectively, meeting the minimum level of diversification, compared with 70 percent and 68 percent four years ago.

This improved diversification is most likely due to the broader use of managed investment products, which continue to gain in popularity. Overall, 76 percent of participants use a managed product, versus 65 percent four years ago. Managed products include target-date funds, which are seeing participation gains grow from 47 percent to 62 percent. When comparing by generation, 83 percent of millennials, 75 percent of gen X, and 70 percent of boomers use some type of managed product in their 401(k) plan.

In a review of data compiled from nearly 2,040 companies in which gender is indicated, women participate in their 401(k) plans at a slightly higher rate than men: 65 percent to 62 percent. The number of women saving at least 10 percent of their salary is slightly lower: 38 percent of women versus 40 percent of men. Sixty-four percent of men are taking full advantage of their company match, compared with 61 percent of women. 

Women use managed products more than men—77 percent of women compared with 74 percent of men—which might explain why they are better diversified. Eighty percent of women are meeting minimum diversification criteria, compared with 78 percent of men. 

Retirement savings tips

If you have the option to join an employer’s 401(k) plan, enroll and contribute up to $18,000 per year; participants age 50 and older can make up to $6,000 in additional catch-up contributions each year, unless their plan has lower limits or doesn’t offer catch-up contributions.

Pay yourself first and save as much of your salary as you can on a tax-advantaged basis. If you don’t have access to a workplace retirement plan, you can set up an automatic savings program and make systematic contributions of up to $5,500 if you are under age 50, or $6,500 if you are age 50 or older through regular contributions to a Roth IRA, with after-tax dollars, or a traditional IRA, with pre-tax dollars, if you meet eligibility requirements.

If contributing to a 401(k), find out if there’s a company match. If there is, consider taking full advantage of it. Remember that the money an employer contributes on your behalf can be added to the amount you’re contributing, and combining the two contributions helps give your overall savings goal a boost.

Research shows that the No. 1 factor in saving for retirement is contribution rate and regular contribution rate increases. Find out if your employer’s plan offers the option to increase your contribution amount automatically and on a regular basis. That’s one less thing to remember, and it’s an easy way to help you save more gradually in preparation for retirement. You can always change the increase rate or limit for your automatic retirement plan contributions.

Asset allocation is the “big picture”—the way you divide your investments among the three basic investment categories: stocks, bonds, and stable value investments. Knowing your investor type—conservative, moderate, or aggressive—can provide a good starting point for determining which asset allocation makes the most sense for you. Use an online tool like www.wellsfargo.com/riskquiz to help you determine risk tolerance.

It may be tempting to spend your savings if you change jobs or have an unexpected expense pop up, but it’s important to keep these assets growing in a tax-favored retirement account. Withdrawing money from your employer-sponsored plan can erode your retirement savings to the point where you may jeopardize your financial security in retirement. 

Wells Fargo is a nationwide financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco. Wells Fargo provides banking, insurance, investments, mortgage, and consumer, and commercial finance through more than 8,700 locations, 12,500 ATMs, and the Internet (wellsfargo.com) and mobile banking. The company says it has offices in 36 countries to support customers who conduct business in the global economy. 

With approximately 266,000 employees, Wells Fargo claims that it serves one in three households in the United States.