VALLEY FORGE, PA — Vanguard has released its inaugural How America Retires report, a sweeping data analysis that arrives as more than four million Americans turn 65 this year—a record wave that is reshaping the nation’s retirement landscape.
The report, designed as a companion to the company’s long-running How America Saves, examines how retirees transition from decades of saving to the far more complicated challenge of generating reliable income. With defined contribution plans now covering more than 100 million workers and holding $12 trillion in assets, Vanguard argues that America’s retirement security increasingly hinges on how individuals navigate this shift.
Lauren Valente, managing director of Vanguard Workplace Solutions, said turning savings into income remains “one of the most important and complex steps in retirement planning,” noting that the new report aims to guide retirees and plan sponsors toward more resilient retirement-income strategies.
Vanguard’s findings show that decades of automatic enrollment, employer contributions, and target-date investment defaults have made saving routine for many workers. Participation rates now average 85%, and total contribution rates have climbed to 12%. But once workers retire, those automatic features fall away, and the decisions become vastly more individualized.
The report highlights several trends shaping retiree behavior. More than half of new retirees initially keep their money in an employer plan, taking advantage of low institutional fees and fiduciary oversight. By contrast, retirees who cash out tend to have smaller balances, with a median withdrawal of about $7,000. Overall, 98% of assets from 2021 retirees were preserved or rolled over, indicating that most retirees seek to safeguard their savings.
Vanguard’s research also emphasizes the growing importance of plan design. Retirees in plans offering flexible withdrawal features—such as installment payments or ad hoc partial distributions—were 35% more likely to remain in the plan three years after retiring. These plans also saw markedly lower cash-out rates, suggesting that access to structured withdrawal tools can discourage retirees from liquidating their accounts too quickly.
The report points to potential trouble spots as well. Nearly 30% of retirees maintain either overly aggressive or overly conservative equity positions, revealing gaps in portfolio construction guidance. And as inflation, health-care costs, and longevity risks rise, many retirees face increasing uncertainty about how long their savings must last.
Vanguard outlines several emerging solutions, including hybrid annuity target-date funds that integrate guaranteed income into traditional investment glide paths, offering protection against outliving one’s savings. The report also calls on plan sponsors to strengthen financial-wellness programs, improve retirement-income tools, and expand access to personalized advice—resources that survey data show can dramatically increase retirees’ peace of mind.
As the largest generation in U.S. history exits the workforce, Vanguard’s analysis arrives at a critical moment. The company argues that while the saving phase of retirement planning has become more structured and successful, the decumulation phase remains too complex and fragmented for many retirees to navigate alone.
With Americans living longer and facing more volatile markets, Vanguard’s message is blunt: better retirement-income strategies are not just helpful—they are becoming essential.
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