Investing

Thirteen Percent of Workers Are Saving in a Roth 401(k)

This is up from 8% in 2011.

By Lee Barney editors@strategic-i.com | August 04, 2017

Roth 401(k)s continue to gain in popularity, according to an Alight Solutions report, “Employee Savings and Investing Behaviors in Defined Contribution Plans.” In 2016, 13% of workers had a Roth 401(k), up from a mere 8% in 2011.

It may be surprising to learn that the biggest age group to invest in a Roth 401(k) are those between the ages of 20 and 29, with 19% of that age group having a Roth 401(k). Moving up the age curve, ownership of Roth 401(k)s continues to trickle down. Among those between the ages of 30 and 39, 15% have a Roth 401(k). For those between the ages of 40 and 49, 12%; those 50 to 59, 11%; and 60 and older, 7%.

People making more money tend to own Roth 401(k)s, with 16% of those earning $60,000 to $79,000 owning one and, again, 16% of those earning $80,000 to $99,000 having one. It ticks down to 13% of those earning $100,000 or more and is a mere 10% among those earning $20,000 to $39,000 and 12% among those earning $40,000 to $59,000.

Among various industries, 22% of those in the computer services or software industry own a Roth 401(k). That is followed by those in consumer manufacturing jobs (17%), insurance (15%), banking and finance (14%) and electronics (13%).

Roth 401(k) owners contribute an average of 5.8% of their salary. Among those earning $60,000 to $79,000, that rises to 6.1%. For those in the $60,000 to $79,000 income range, it is 6.4%; for those in the $80,000 to $99,000 range, it is 6.4%; and for those earning $100,000 or more, it is 6.9%.

Alight says that today, 75% of large employers offer a Roth option, up from 50% in 2011.