Ascensus' Annual Savings Trends Research Reveals How Individuals Are Saving for Their Financial Futures

DRESHER, Pa., Sept. 3, 2019 /PRNewswire/ -- Ascensus--whose technology and expertise help millions of people save for retirement, education, and healthcare--has released new insights across its universe of retirement, education, Achieving a Better Life Experience (ABLE), and health savings accounts on the 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, 4.6 million 529 college savings accounts, 280,000+ consumer-directed healthcare accounts, and 20 ABLE plans for which it provided recordkeeping and administrative services as of 2018 year-end. The firm also highlighted health savings account (HSA) industry data from Devenir, a national leader in providing 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%, which
        was 10 percentage points higher than that in plans without automatic
        enrollment.
    --  In 2018, 35% of 529 account owners had scheduled recurring bank
        contributions and 20% of ABLE accounts leveraged automatic savings
        methods. Approximately 6% of 529 account owners utilize payroll direct
        deposit, but there is certainly more opportunity for employers to offer
        and promote 529 account payroll integration to help employees seamlessly
        make regular contributions.
    --  According to Devenir, 26% of all HSA contributions came directly from an
        employer and 56% 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.

Digital tools have a positive influence:

    --  Ascensus' Retirement Outlook Tool allows savers to refine retirement
        savings goals, illustrating how their current savings levels could
        impact future readiness. In 2018, 26% of first-time tool users were
        saving at an average rate of 8% within a few weeks of engaging with it.
        This suggests that access to the right planning tools can make a
        positive difference in getting employees closer to a savings rate of 9%
        or more, the minimum rate that "financially prepared" savers have
        selected according to Ascensus' partner Financial Finesse, the largest
        independent provider of unbiased workplace financial wellness programs
        in the country.(1)
    --  The firm's Ugift platform enables family and friends to simply and
        securely make gifting contributions to beneficiaries' 529 accounts. The
        Ugift website allows users to establish gift-giver profiles and schedule
        recurring gifts to streamline the process--and gifting behaviors are on
        the rise as a result. As of 2018 year-end, gift givers had established
        26,284 online profiles and 10,438 recurring gifts. Overall, the Ugift
        program saw a 345% year-over-year increase in dollars gifted to 529
        accounts.

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 our platform
        who have found that they are "on track" to meet their goals, 20% of them
        are between 25 and 34 (versus just 3% for the under-25 age group).
    --  As tuition expenses continue to rise, families see the value of
        investing in 529 accounts to build a foundation of education savings.
        The market downturn in 2018 had a minor impact on overall 529 account
        balances across all demographics, but this average balance still reached
        nearly $23,000 as of 2018 year-end. Another key trend tied to this
        landscape of higher education expenses is the entrance of older
        generations of account owners into the 529 market. Account owners ages
        55 to 64 and over 65, with average beneficiary ages of 17 and 13
        respectively, had the second- and third-largest average balances of all
        age groups, both exceeding $22,000.
    --  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% 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.

For additional trends and insights from Ascensus, visit pulse.ascensus.com.

About Ascensus
Ascensus is the largest independent recordkeeping services provider, third-party administrator, and government savings facilitator in the United States. The firm delivers technology and expertise to help millions of people save for what matters most--retirement, education, and healthcare. For more information about Ascensus, visit ascensus.com. View career opportunities at careers.ascensus.com.

(1)2018 Year in Review: A Closer Look, Financial Finesse Think Tank Research, May 2019.

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SOURCE Ascensus