Some employers are also using the auto escalation feature, which gradually increases their workers' contribution every year.
Currently, the number of companies offering automatic enrollment is holding steady at about 30 percent, but as market conditions improve, that figure could climb to 50 percent, says Nevin Adams, editor in chief of Plansponsor.com, an adviser for the retirement planning industry.
In 401(k) plans, automatic enrollment has tended to increase participation rates to more than nine out of 10 eligible employees, the Treasury Department reports.
Plans that offer automatic enrollment helped fuel the popularity of target-date funds. That's because the federal government approved these investment vehicles under the Pension Protection Act of 2006 as a default option of 401(k) plans.
Also known as life cycle or age-based funds, target-date portfolios are designed to simplify long-term investing by automatically shifting their allocation (or glide path) of stocks and bonds to become more conservative as the retirement date edges closer.
Target-date funds come in two broad categories.
The "to retirement" variety selects a glide path that is often more conservative, anticipating investors will cash out of the fund once they reach retirement and move their money into an annuity.
The "through retirement" target-date funds, meanwhile, presume the investor will gradually draw down their fund during retirement. Because it assumes a longer time horizon, it tends to be more heavily weighted in stocks.
Some target-date funds suffered mightily during the recent bear market, with losses ranging from 15 percent to more than 40 percent in 2008.
Because some investors claim they didn't understand the risks, the White House recently announced plans to review target-date funds to ensure that employers that offer them as part of their 401(k) plans can better evaluate their suitability for their work force and to require that workers receive clear disclosures about the risk of loss.