VALLEY FORGE, PA — A new analysis from Vanguard reveals that just 42% of Americans are currently on track to achieve retirement security, underscoring persistent gaps in savings access and financial preparedness across generations.
The Vanguard Retirement Outlook report, powered by the firm’s updated Vanguard Retirement Readiness Model, evaluates the retirement readiness of U.S. workers by factoring in income, savings, spending goals, and access to employer-sponsored retirement plans. The findings point to a clear trend: workers with access to defined contribution (DC) plans—such as 401(k)s—are twice as likely to meet their retirement goals as those without.
Vanguard’s research suggests that expanding DC plan access to all workers could raise national retirement readiness by 19 percentage points. Additionally, extending the average working age by two years, to 67, could boost readiness by another 13 points.
“Expanding access to defined-contribution plans and improving plan design has dramatically improved retirement outcomes,” said Fiona Greig, Ph.D., Vanguard’s Global Head of Investor Research and Policy. She noted that autoenrollment and higher default savings rates have proven effective in helping more Americans build wealth for retirement.
Generational Divide in Retirement Preparedness
The study found younger generations are better positioned for retirement than their older counterparts. Nearly half of Gen Z workers (47%) and 42% of millennials are on track to maintain their lifestyle after leaving the workforce—compared with roughly 40% of Gen X and baby boomers. The improved outlook among younger workers is largely attributed to broader access to DC plans and stronger plan design features introduced over the past decade.
However, debt remains a major obstacle. For millennials, student loans and other liabilities—averaging 25% of income—reduce the likelihood of retirement success by nine percentage points. Vanguard’s analysts note that this debt burden highlights the growing importance of financial wellness programs, emergency savings options, and access to professional financial advice.
Among baby boomers and Gen X, the picture is more mixed. Median-income boomers are expected to replace only 56% of their pre-retirement income, leaving an average annual spending shortfall of $9,000. For Gen X, the gap narrows slightly to $6,000, or about 18% of expected expenses.
Implications for Workers and Policymakers
The report emphasizes that improving retirement outcomes will require cooperation between employers, policymakers, and individuals. For older workers, options such as tapping home equity or working longer could help close income gaps. For younger workers, expanding access to DC plans and maintaining consistent saving habits remain key to long-term financial resilience.
“Retirement readiness isn’t just about saving—it’s about having the right tools, support, and access throughout a worker’s career,” said Kelly Hahn, Vanguard’s Head of Retirement Research. “Retirement security is a shared responsibility.”
Broader Impact on American Communities
The findings have broader implications for communities nationwide. A lack of retirement readiness among nearly 60% of Americans could strain public resources and social safety nets in the coming decades, particularly as the population ages. Communities with lower rates of employer-sponsored plan access—often small businesses, service industries, and rural areas—may face the greatest financial insecurity among retirees.
By expanding access to retirement savings programs and encouraging longer workforce participation, Vanguard’s report suggests policymakers and employers could help strengthen both household finances and the economic stability of entire regions. As America’s workforce evolves, the data makes clear that sustainable retirement security is increasingly tied to inclusive access and long-term financial education.
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