State of Savings: December 2020

Image: State of Savings: December 2020

The economic impact of the COVID-19 pandemic has been felt far and wide, both in the U.S. and globally. But what has it meant for tax-advantaged savings levels in vehicles such as retirement , 529, and health savings & flexible spending accounts? Our proprietary data, tracked over the course of 2020, reveal shifts in contribution and withdrawal behaviors by business owners and individuals in response to the financial challenges posed by the pandemic. Overall, these insights suggest a continued appreciation for the importance of savings and the ability to access these savings when needed.


  • After the pandemic took hold in the U.S. in March 2020, employer retirement plan contribution activity was fairly volatile. Overall, employer contribution amounts remained steadily below projections, with the most dramatic drops in March and April and a notable recovery in May through July. As of year-end, contributions appeared to have settled at a more consistent monthly amount, yet they remained 6.8% lower than projected.
  • As of December, 12.6% of employers restarted their plan matching contributions after some match interruption during March through November, either due to business interruption or temporarily suspending match.
  • In 2020, we saw low employer adoption of CARES Act distribution and loan options relative to early industry projections, with just 16.6% of employers adopting coronavirus-related distributions (CRDs) and 9.9% adopting CARES loans.
  • Eligible savers took CRDs at a higher rate in the final quarter of the year, with 2.0% taking a CRD in Q4. However, the overall total percentage of those taking CRDs remained very low for the full year, at just 4.9%. The availability of CARES loans expired at the end of September. By that time, only 1.4% of eligible savers had takes a CARES loan.
  • The vast majority of savers "stayed the course" in 2020, with only 1.8% stopping their deferrals to their retirement plan (0% savings rate) and 2.6% reducing their savings rate.

Education Savings

  • One-time contribution amounts to 529 accounts showed a slow yet steady improvement starting in August. In the fourth quarter, the average one-time 529 contribution amount rebounded to 2019 levels, but the number of savers making one-time contributions remained below prior-year levels.
  • Qualified withdrawals were significantly reduced from prior-year levels, as measured both in the amounts withdrawn from accounts (14.6% decrease from 2019) and in the number of withdrawal transactions (16.7% decrease from 2019). This trend aligns with national statistics around declines in enrollment during the pandemic and a greater percentage of students attending school from home, reducing the need for room and board payments.

Health and Benefits

  • According to data from Chard Snyder, an Ascensus company, qualifying events as a percentage of eligible savers was in line with year-over-year projections at the start of 2020, but ramped up 10% in March through May. This was driven by an increased level of employer hardships and changes in employment status. We saw a temporary recovery, with qualifying events dropping below 2019 levels in July; yet that was followed by a sharp increase to above-2019 levels in August and September. In the final months of the year, the number of qualifying events leveled out, showing a 2.2% increase over 2020 projections as of the end of December.
  • Debit card activity linked to healthcare accounts (including HSAs, HRAs, and FSAs) was above projected levels as of year-end, with the number of transactions 28.3% higher and the average amount per transaction 33.3% higher than expected.

View and download the complete State of Savings report here.

Reference our previous report here. For the latest regulatory and legislative updates, visit our newsroom.