I started investing in the early 1990s and began working on Wall Street in 1997. I’m a former Series 7-licensed broker and a Series 65 license holder. As you might suspect, many people ask me questions about managing their money.

One thing that always astounds me is how few people take full advantage of their retirement accounts, such as a 401(k) or 403(b). It’s the simplest and easiest way to achieve millionaire status, yet many fail to contribute enough to it, and some don’t even take advantage of it at all.

The math is pretty simple. And the stock market, while there are obviously no guarantees, shows that money stashed away now can turn into big money down the road thanks to compound interest, or the ability to earn interest on your interest.

Despite this opportunity for life-changing financial freedom, too few make the most of these accounts.

Does this sound familiar? You signed up for your 401(k) or 403(b) when you were hired, picked a contribution rate —maybe enough to grab the employer match—and then… never looked at it again.

You aren’t alone. But here’s the blunt reality: inertia is a major threat to your retirement security. If you want to really move the needle on your net worth, stop treating your retirement plan like a static account and start treating it like a scalable engine.

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The retirement savings ‘minimum’ mirage

Vanguard’s “How America Saves 2025” report, which crunches data on 4.8 million worker retirement accounts earning a median $89,000 per year, reveals that the average American’s deferral rate into retirement accounts was a record high of 7.7% in 2024. That may sound like a win, but digging into the numbers reveals a darker trend.

Only about 14% of participants actually contribute the annual IRS maximum ($23,500 for 2025, or $31,000 for those 50 and older). For workers earning between $75,000 and $100,000, that number drops to a staggering 2%.

There are real reasons so few max out their accounts, given job worries and inflation, but the default trap is also to blame.

Many employers use automatic enrollment when you’re hired to get you into the plan. While that’s a good thing, they often sign you up by default at a low contribution rate of 3% or 4%. If you never change that rate, you aren’t just leaving money on the table—you’re falling very short of the 15% total savings rate (including employer match) that most experts, including those at Fidelity, suggest is necessary to maintain your lifestyle in retirement.

“This [15 %] guideline is based on research findings that most people need between 55% to 80% of their preretirement income to finance their lifestyle in retirement,” writes Fidelity. “Not all of it needs to come from your savings; some may come from Social Security. That, combined with saving 15% each year from age 25 to 67, should help you reach that level of income replacement.”

Despite that advice, only one in four workers contributes over 10% to their retirement plan, according to Vanguard.

Worse, 28% of non-retirees don’t have a dime in savings, according to the Federal Reserve.

The secret weapon: auto escalation

This is where a “hidden twist” or “little-used hack” comes in. In the past, you had to visit Human Resources and manually update your contribution rate — something many people never got around to.

That’s not the case anymore. Most workers can manage their plan online, so nowadays, you only have to flip one switch: Auto-Escalation.

Auto-escalation is a plan feature offered by many employers that automatically increases your contribution percentage at regular intervals—usually by 1% to 2% per year.

“Over the past two decades, retirement plan sponsors have increasingly turned to automatic solutions to help employees save more for retirement,” wrote Vanguard. “Two-thirds of automatic enrollment plans have implemented automatic annual deferral rateincreases.”

The beauty of this feature lies in its set-it-and-forget-it simplicity and invisibility.

For example, if you get a 3% annual raise but your 401(k) contribution only ticks up by 1% each year, your take-home pay still goes up. You’re “paying yourself first” before you experience “lifestyle creep.”

Unfortunately, despite these benefits, we aren’t using this feature enough. Secure 2.0 legislation requires most new plans to include auto escalation, but many workers still stuck in older plans are left on the sidelines.

According to Vanguard, only 45% of participants increased their contribution rate in 2024, and just 29% did so via an auto-escalation feature.

1% matters more than you think

You might wonder, “What’s an extra 1% going to do?” In the world of compounding, the answer is: everything.

According to models by the Employee Benefits Research Institute (EBRI), adding auto-escalation to the mix is a game-changer.

“When automatic escalation is added to the automatic enrollment plans with a 6 percent default contribution rate, the reduction in the retirement savings shortfall increases to 9 percent,” writes EBRI.

That difference in retirement readiness associated with using auto escalation in a 401(k) or 403(b) can represent the gap between a retirement spent worrying about inflation and one spent enjoying the fruits of your labor.

The big takeaway

Wall Street loves to talk about “alpha” and “beating the market,” but the average person, the most significant “alpha” comes from simply increasing their savings rate.

Check your 401(k) portal today. If your plan offers auto-escalation, turn it on. If it doesn’t, set a calendar reminder for your next work anniversary to manually bump your rate by at least 1%.

Don’t let a choice you made five years ago dictate the quality of your life twenty years from now. It’s time to put your savings on autopilot—and then aim higher.

What you should do now:

• Review your current contribution rate and balance.
• Determine if you have an auto-escalation feature available in your 401(k) or 403(b) by logging into your account or contacting your human resources department.
• Commit to boosting your contribution annually by at least 1%.
• Target a total contribution rate (including employer contributions) of at least 15% over time.

Related: A boringly beautiful strategy for financial freedom