What is 401(k) auto-escalation and should I keep it turned on?

Auto-escalation automatically increases your deferral rate by a set amount, often 1% of pay, each year up to a cap, without you having to remember to do it. SECURE 2.0 requires many new auto-enrollment plans to auto-escalate participants annually until they reach at least 10%.

For most savers, keeping it on is smart, because the increases are small enough to be painless yet compound powerfully over a career, and they counter the natural tendency to under-save. You can opt out or adjust the cap in your plan portal if a year gets tight or you have already maxed out. If you are aggressively pursuing an early-retirement or high-savings goal, you may want to set your rate manually higher than the auto-escalation ceiling.