Retirement savers are better positioned for post-work success than ever before, thanks to more than a quarter-century of progress in 401(k) plan design and participant behavior.

That's according to a new report from the investment management firm Vanguard. "How America Saves" explores the retirement behaviors of almost five million workers in the United States. Over time, the report explains, 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, too, 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 of Vanguard Workplace Solutions.

25 years of improvements

  • Throughout 25 editions of "How America Saves" reports, certain long-term trends demonstrated how 401(k) plan design innovations significantly improved participant outcomes. These trends include:
  • Automatic features expanded 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.

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

To that end, 45% of participants increased their savings rate in 2025, contributing to an average savings rate of 12.1% — an all-time high. Account balances rose 13% year over year, too, reflecting both improved savings behavior and long-term market participation.

"While the progress and participant outcomes are significant, they also highlight where we need to go next," Valente said, noting that increased hardship withdrawals point to continued gaps in financial resilience and the need for solutions that better support participants through unexpected expenses. "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."

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