The Key to 401(k)s

We have some encouraging news about Americans' retirement savings: Workers who are encouraged to contribute more to their 401(k) plans, it turns out, actually end up making even greater contributions than their plans called for. And apparently people are becoming increasingly aware of  how important their retirement savings are, because the percentages of assets going into 401(k)s is rising.

Here are the stats: Among 401(k) plans that have a default rate of 3 percent or higher of the employee's salary deferred, 30 percent of plan participants increase their contributions within a year of enrolling. That figure was only 13 percent in 2006, but has been increasingly steadily ever since.

That initial, automatic contribution rate seems to be key. Plans with a default deferral rate of 3 percent of salary have a participation rate of 95 percent. Lower deferral rates get participation of less than 90 percent, plus the employees put less away, with only 26 percent increasing their contributions in the first year. All in all, though, it's great news that Americans are making more use of their 401(k)s.