Many boost 401(k) while relying less on pensions

Are you saving more for retirement? A recent study by Fidelity Investments found that in the past 12 months, 1 in 5 employees upped her 401(k) savings rate — the highest percentage since Fidelity began tracking it seven years ago.

What has brought on the savings bug?

Jeanne Thompson, a vice president of Fidelity, said more people are realizing they can’t rely on a pension to fund old age. “The bulk of retirement income is going to come from their 401(k),” she said.

But programs that automatically raise contribution rates also are playing a role.

According to the study, 38 percent of savings increases were because of auto-escalation programs that raise your 401(k) contribution for you. For Gen-Y workers, auto-escalation accounted for half of all contribution increases.

Sign up for savings increases

On average, workers are socking away 8 percent of their salary per year in a 401(k), plus any employer match (typically 3 percent or more). Most financial planners recommend an annual savings rate of 10 to 15 percent.

More than three-fourths of employers offer an auto-increase feature for contributions. To take advantage of it, you might have to sign up online or by phone. But some companies will enroll you automatically, typically raising your savings rate by a percentage point per year, up to a cap (which you can adjust). In 2014, the most you can save in a 401(k) is $17,500, or $23,000 if you’re 50 or older.

If you don’t want to participate in the auto-escalation program, you can opt out. But Fidelity found that only 7 percent of employees do that.

“Inertia takes over,” Thompson said.

And when inertia leads to consistent saving, the payout can be big. Fidelity said that, at the end of the first quarter, the average 401(k) balance was $88,600, but for people who’ve had their account 10 years or more, the average was much higher: $238,400.

Raise contributions

Get on track by setting up your own auto-increase plan, of sorts. Pick a time once per year — say, Jan. 1— and raise your contribution rate by a small amount. Do that until you’re saving 10 percent or more (including any employer match).