VALLEY FORGE, PA — Participation in employer-sponsored retirement plans reached a record 86% of eligible workers while average savings rates climbed to an all-time high in 2025, according to Vanguard’s latest analysis of nearly five million defined-contribution plan participants, underscoring the growing influence of automatic enrollment and plan design on retirement outcomes.
The findings, published in Vanguard’s annual How America Saves report, suggest that retirement plans increasingly rely on automated features rather than individual action to drive participation and long-term investing behavior.
Participation among eligible employees has risen from 65% over the past quarter century, according to the report, as automatic enrollment became more widely adopted across workplace retirement plans.
The study found that nearly two-thirds of plans now automatically enroll participants at contribution rates of 4% or higher, while roughly one-third use default contribution rates of 6%.
Average employee savings rates reached 12.1% in 2025, a record level. Forty-five percent of participants increased their savings rate during the year.
Retirement account balances increased 13% from a year earlier, reflecting a combination of higher contributions and market gains, Vanguard reported.
The report also found that participants largely avoided reacting to market volatility. Only 5% of workers made trades within their retirement accounts during periods of market turbulence.
Professional investment management has become increasingly common. Nearly 70% of participants now use professionally managed portfolio allocations, helping improve diversification compared with earlier generations of retirement savers.
Employer contributions also continued to rise. Vanguard reported that matching contributions reached a record average of 4.7%, providing an additional boost to retirement savings accumulation.
“Strong default contribution options and automatic features have made saving for retirement more accessible and effective for more Americans than ever before,” Lauren Valente, managing director of Workplace Solutions at Vanguard, stated in the report.
Despite the progress, Vanguard noted signs of continued financial stress among workers.
The report cited rising hardship withdrawals as evidence that many participants continue to struggle with short-term financial needs even as long-term retirement preparedness improves.
“Continuing to strengthen the system means helping Americans manage short-term financial pressures while staying on track for long-term retirement security,” Valente noted.
The annual report analyzes participant behavior and plan design trends across Vanguard-administered defined-contribution retirement plans and is based on data from nearly five million workers.
More information is available at vanguard.com.
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