Vanguard’s 25th “How America Saves” Reveals a Quiet Retirement Revolution

How America Saves, Vanguard's annual report on the retirement behaviors of nearly five million American workers, reveals that retirement savers are in a stronger position than ever, reflecting more than 25 years of progress in 401(k) plan design and participant behavior.

Over time, the defined contribution system has steadily evolved from one reliant on individual action to one driven by plan design. As a result, participation in retirement plans climbed to a record 86% among eligible employees, portfolio diversification has improved significantly, and participants are staying the course with only 5% making trades even in times of volatility, signaling stronger long-term outcomes.

"More than 25 years of data and insights make it clear-strong default contribution options and automatic features have made saving for retirement more accessible and effective for more Americans than ever before," said Lauren Valente, Managing Director, Workplace Solutions. "We are proud to highlight the progress the industry has made with better plan design helping more people save, stay invested, and build stronger financial futures."

25 years of progress: A system transformed by plan design

Throughout 25 editions of How America Saves, certain long-term trends demonstrated how 401(k) plan design innovations significantly improved participant outcomes over the last quarter century, including:

• Automatic features expand access. Participation increased from 65% to 86%, reflecting the widespread adoption of automatic enrollment and its role in bringing more workers into the system.
• Higher defaults drive stronger savings. Nearly two-thirds of plans now default participants at 4% or higher automatic enrollment, with about one-third at 6%-both all-time highs.
• Professional management is now the standard. Nearly 70% of participants now use professionally managed allocations, helping drive more diversified portfolios.
• Employer support improves participant outcomes. Matching contributions have risen over time to a record 4.7%, bolstering participant savings and long-term accumulation.

Building on momentum: Continued progress in 2025

Against the backdrop of longer-term trends, 2025 data highlights how participants are continuing to build on decades of steady improvement, reinforcing stronger retirement outcomes:

• Savings behavior continues to improve. Forty-five percent of participants increased their savings rate in 2025, contributing to an average savings rate of 12.1%--an all-time high.
• Balances continue to rise. Account balances rose 13% year over year, reflecting both improved savings behavior and long-term market participation.
• Staying the course. Only 5% of participants traded during periods of volatility, signaling continued long-term focus.

Looking ahead: Strengthening the system for the future

Despite meaningful progress, the report highlights ongoing financial pressures American workers face, particularly in managing short-term needs alongside long-term savings goals. Increased hardship withdrawals point to continued gaps in financial resilience and the need for solutions that better support participants through unexpected expenses.

"While the progress and participant outcomes are significant, they also highlight where we need to go next," said Valente. "Continuing to strengthen the system means helping Americans manage short-term financial pressures while staying on track for long-term retirement security and expanding solutions that support them at every stage of their journey."

How America Saves is Vanguard's annual analysis of participant behavior and plan design trends within defined contribution plans, providing a comprehensive view of how Americans are saving and investing for retirement.