The average 401(k) savings rate, including employee deferrals and company contributions, continued to climb in 2023, a new industry survey reported.

In 2023, the average combined savings rate was 12.7%, up from 12.1% in 2022, with employees deferring 7.8% of pay and companies adding 4.9%, according to the Plan Sponsor Council of America’s yearly survey of more than 700 company 401(k) and profit-sharing plans.  

“The deferral rate has been trending up over time,” with dips during economic downturns, said Hattie Greenan, director of research and communications for the Plan Sponsor Council of America.  

More from Personal Finance:
Paying down debt is Americans’ top money goal for 2025. Here are tips
Here’s what to know before rebalancing your bitcoin profits, advisor says
The Fed cut rates by another quarter point: What that means for your money

Meanwhile, Vanguard reported the average combined savings rate was an estimated 11.7% in 2023, which matched the figures from 2022, according to the company’s yearly analysis of more than 1,500 qualified plans and nearly 5 million participants.

Fidelity Investments, which reports retirement savings rates quarterly, estimated the combined savings rate was 14.1%, as of Sept. 30, 2024, based on an analysis of 26,000 corporate retirement plans.

Vanguard recommends saving 12% to 15% of your earnings every year, including employer contributions, to meet your retirement needs. The combined savings benchmark for Fidelity is 15%.  

Typically, companies match employee deferrals up to a specified limit — and you should aim to contribute at least enough to get the full match, said Greenan from the Plan Sponsor Council of America.

“That’s really going to add up over time,” she said. 

More than 80% of plans included a matching contribution in 2023, according to the Plan Sponsor Council of America report.

After hitting the match, some experts suggest boosting your deferrals every year, but “you’re going to see growth from whatever you can afford to contribute,” Greenan said.

Starting in 2025, the 401(k) maximum employee deferral will jump to $23,500, up from $23,000 in 2024. The 401(k) catch-up contribution will remain $7,500 for workers 50 and older, but increases to $11,250 for investors aged 60 to 63. 

If you’re planning to save more in 2025, right now is “an important time of the year” to boost deferrals, said certified financial planner and enrolled agent Catherine Valega, founder of Boston-area Green Bee Advisory. 

Typically, it takes a few paychecks until your 401(k) deferral updates go into effect, so it’s better to make changes in December to be ready for January, she said. 

Only 14% of employees maxed out 401(k) plans in 2023, according to Vanguard’s annual report. On top of maxed-out contributions, an estimated 15% of workers made catch-up contributions in plans with the feature, the same report found.

The Senate is getting closer to a final vote on a bill that would increase Social Security benefits for an estimated 3 million people.

The chamber voted Wednesday to let consideration of the bill — the Social Security Fairness Act — proceed. The bipartisan proposal calls for repealing certain rules that reduce Social Security benefits for individuals who receive pension income from work in the public sector.

Despite a bipartisan 73 majority vote to proceed, the effort to advance the bill was met with some dissent, with Sen. Thom Tillis, R-N.C., citing the costs associated with the change. The Congressional Budget Office has estimated repealing the rules — known as the Windfall Elimination Provision, or WEP, and Government Pension Offset, or GPO — would cost $196 billion over 10 years.

The WEP reduces Social Security benefits for individuals who receive pension or disability benefits from jobs where they did not pay Social Security payroll taxes. The GPO reduces Social Security benefits for spouses, widows and widowers who also receive their own government pension income.

Passing the bill would speed up Social Security’s trust fund insolvency dates by six months, according to the Committee for a Responsible Federal Budget. Without the change, Social Security’s trustees have projected the trust fund the program relies on to pay retirement benefits will run out in 2033, when 79% of those benefits will be payable.

“We are about to pass an unfunded $200 billion spending package for a trust fund that is likely to go insolvent over the next nine to 10 years, and we’re going to pretend like somebody else has to fix it,” Tillis said during a Senate speech ahead of the vote to advance the bill.

Tillis said lawmakers are not considering the 97% of beneficiaries who would not benefit from the bill, but who would be hurt by future consequences that passing it would have on the program.

More from Personal Finance:
Answers to common questions on the Social Security Fairness Act
73% of workers worry Social Security won’t be able to pay benefits
Early retirement is a surprise for many workers, study finds

“Ladies and gentlemen, this bill has not even had a hearing in any committee in the House or the Senate,” Tillis said.

The Social Security Fairness Act was approved by the House in November after two lawmakers – Reps. Abigail Spanberger, D-Va., and Garret Graves, R-La. – filed a discharge petition to force a vote on the bill. The Senate cloture vote to proceed to a final vote also limited the ability for that chamber to debate the proposal.

The 27 Senate leaders who voted “no” on moving the Social Security Fairness Act to a final vote are all Republicans, with the exception of Sen. Joe Manchin, an independent representing West Virginia.

The Senators who voted to move the bill forward included a mix of Democrats and Republicans, including Senate Majority Leader Chuck Schumer, D-N.Y., and Vice President-elect and Sen. JD Vance, R-Ohio.

The Biden administration announced on Friday that it would forgive another $4.28 billion in student loan debt for 54,900 borrowers who work in public service.

The relief is a result of fixes the U.S. Department of Education made to the once-troubled Public Service Loan Forgiveness Program.

The debt relief comes in President Joe Biden’s final weeks in office.

Biden has forgiven more student debt than any other president. He has cleared nearly $180 billion for 4.9 million people with student debt.

Still, Republican-led legal challenges have stymied all of Biden’s attempts at delivering wide-scale relief.

This is breaking news. Please refresh for updates.