Does Industry Affect Likeliness to Save For Retirement?

Our newest analysis suggests that the industry you choose to work in can have a profound effect on how likely you are to save for retirement in a 401k. While this might be partially due to the nature your industry, we find evidence that there are systematic differences – beyond a participant’s control – that contribute to the varying participation rates. Through this analysis we’ll get a glimpse into the industries that are leading America in preparing for retirement and those that need the most assistance.

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Key Findings

  • In our analysis of 108 industries, there is a 38.9% spread between the best and worst participation rates.
  • Autoenrollment can increase participation by over 20%
  • Industries with higher participation rates tend to be less impacted by the existence of autoenrollment. In fact, each 10% jump in participation rate translates to a 4.7% decrease in autoenrollment effectiveness.
  • Insurance Carriers have the highest participation rates and autoenrollment coverage of any industry
  • The presence of autoenrollment actually has a small negative impact on participation rates in 2 industries – offices of dentists and physicians. Their participants tend to have high participation regardless of this feature.
  • The list of top and bottom 10 industries by 401(k) participation rate

How Much Do Participation Rates Vary by Industry?

401k plan participation rates vary significantly by industry. In our analysis of 108 industries, there is a 38.9% spread between the best and worst participation rates.. While some industries have 90%+ participation, others struggle to get 50%+ participation.

The following is a list of the the 20 industries with the highest and lowest participation rates. For each, we also include the percentage of employers that offer autoenrollment. While we see varying levels of autoenrollment at both the top and bottom of the list, our analysis shows that higher levels of autoenrollment are correlated with higher participation rates. We’ll discuss this further in the next section.

We see traditional and stable industries with the highest participation rates – this includes insurance, legal services and doctor’s offices. Additionally, we see finance-related industries also topping the list. This makes sense as employees in these industries are more likely to have the domain knowledge needed to manage their 401k.

Leading the list of industries with lowest participation are more transient industries such as restaurants and grocery stores. Increasing participation in these low participation industries can require creativity on the part of the sponsor and advisor to encourage employee saving. The presence of autoenrollment does tend to be less frequent in lower participation industries.

 Top 10 Industries by 401k Participation  
 StateParticipation RateEmployers w/ Autoenrollment
1Insurance Carriers92.3%32.7%
2Legal Services91.1%7.2%
3Offices of Physicians90.8%4.4%
4Other Financial Investment Activities90.6%11.8%
5Offices of Dentists90.5%2.5%
6Depository Credit Intermediation89.7%16.4%
7Accounting, Tax Preparation, Bookkeeping, and Payroll Services88.7%8.0%
8Electric Power Generation, Transmission and Distribution87.8%21.6%
9Agencies, Brokerages, and Other Insurance Related Activities86.9%12.7%
10Securities and Commodity Contracts Intermediation and Brokerage86.5%12.3%
 Bottom 10 Industries by 401k Participation  
 IndustryParticipation RateEmployers w/ Autoenrollment
1Restaurants and Other Eating Places53.4%4.0%
2Traveler Accommodation60.8%8.9%
3Special Food Services61.2%3.9%
4Home Health Care Services61.9%7.7%
5Grocery Stores64.7%8.3%
6Other Amusement and Recreation Industries64.9%6.9%
7Services to Buildings and Dwellings66.5%5.2%
8Specialty Food Stores66.8%9.3%
9Automobile Dealers66.9%16.3%
10Employment Services67.1%9.1%


The Effect of Autoenrollment on Participation

Nationally, we found that only 12.9% of 401(k) plans have autoenrollment – this means that workers at 87.1% of employers need to be proactive to save for retirement.  This is a surprisingly low number and one drastically different from what surveys have suggested, including a 2014 survey by Towers Watson that showed 64% of employers offered autoenrollment. This is due to a number of reasons including higher record keeper fees and enforcement complications. While there can be complications with offering it for an employer, it can be a powerful tool to encourage employees to increase participation rates.

The frequency of autoenrollment availability varies significantly by industry, ranging from 2.5% to 32.7% of employers having autoenrollment showing that it is still not a national standard. The impact of autoenrollment by industry is just as varied as its presence. On average, autoenrollment increases participation rates by 11.6% across industries. However, it can increase participation rates by as much as 22.2%. In fact, 22 of the 108 industries analyzed saw participation increase by over 15% when autoenrollment was present. Yet, autoenrollment does not always have a strong or even positive effect. 8 of the industries analyzed were impacted by less than 5%. And participation rates in offices of dentists and physicians were impacted negatively by the presence of autoenrollment.

The graph below summarizes the effect of autoenrollment on participation rate by industry. With each dot representing one of the 108 industries included in the study, it is clear that industries with higher participation rates are less affected by autoenrollment. In fact, each 10% jump in participation rate translates to a 4.7% decrease in autoenrollment effectiveness.

A note on our data:

To complete this study, we used PlanPro’s proprietary database which is comprised of the latest plan data submitted to the Department of Labor for 2016.