High Earners Cut 401(k) Maxing Out as Vanguard’s $150,000-Plus Saver Rate Falls to 51%
Updated
Updated · Wealth Management · Oct 6
High Earners Cut 401(k) Maxing Out as Vanguard’s $150,000-Plus Saver Rate Falls to 51%
3 articles · Updated · Wealth Management · Oct 6
Summary
Vanguard found 51% of workers earning $150,000 or more maxed out 401(k)s last year, down from 60% in 2018; among those earning $100,000 to $149,999, the share fell to 10% from 22%.
Higher earners are still contributing enough to capture employer matches, but many are redirecting money to Roth IRAs, HSAs and brokerage accounts for earlier access, broader investment choice and protection against potentially higher future tax rates.
Rising annual limits partly explain the drop: a $150,000 earner needed to defer about 12% of pay to hit the cap in 2018 versus roughly 16% today, even as average deferral rates remain high.
The shift is also being fueled by strong market gains and confidence in self-directed investing—Fidelity counted a record 769,000 401(k) millionaires in the second quarter—though retirement experts warn social-media-driven stock picking can leave savers overconfident and underdiversified.