VALLEY FORGE, PA — Retirees are more than 40% more likely to remain in their workplace retirement plans when employers offer flexible withdrawal options, according to Vanguard’s 2026 How America Retires report, underscoring the role plan design plays in determining where Americans keep their savings after leaving the workforce.
The Valley Forge-based investment manager’s second annual report examines how retirees invest, preserve and withdraw their retirement savings, drawing on Vanguard retirement plan data and industry trends.
The findings show that approximately half of retirees initially retain their savings in workplace plans after retirement, although many eventually transfer their balances to individual retirement accounts.
Among recent retirees, access to partial withdrawals and installment payments was associated with a more than 40% greater likelihood of remaining in their employer-sponsored plans.
Only 15% of retirees withdrew their entire workplace retirement account balance during the year they retired, indicating that most preserved at least some of their savings rather than immediately converting their accounts to cash.
The findings highlight a shift in retirement plan management as employers and financial services providers address the transition from accumulating assets during working years to generating income after retirement.
Workplace retirement plans have increasingly incorporated automatic enrollment, default investment options and other features designed to encourage long-term saving. Decisions about withdrawing those assets, however, remain more individualized.
“Defined contribution plans have helped millions of Americans make meaningful progress in building the savings they need for retirement,” Lauren Valente, managing director of Vanguard Workplace Solutions, stated. “But the move from decades of accumulation before retirement to decades of decumulation during retirement is one of the most personal, significant financial shifts people navigate.”
Vanguard’s analysis also identified differences in withdrawal behavior based on how retirees access their accounts.
Retirees receiving regular installment payments generally withdrew smaller portions of their account balances than those making occasional withdrawals, suggesting that payment structure is associated with how quickly savings are drawn down.
Investment allocation presents another challenge.
Approximately 40% of retirees managing their own investments hold portfolios that Vanguard characterized as either highly aggressive or highly conservative.
The company noted that some of those allocations may reflect investment decisions made before professionally managed options, including target-date funds, became widely available in workplace retirement plans.
Such funds typically adjust investment allocations over time, reducing the need for participants to manage their portfolios independently as retirement approaches.
The report identifies professionally managed investments, personalized financial guidance and flexible distribution arrangements as features employers can use to support participants before and after retirement.
Its findings build on Vanguard’s How America Saves 2026 report, which examined retirement saving behavior among nearly five million American workers.
While that earlier analysis documented progress in workplace retirement saving, the latest report focuses on the less standardized process of managing accumulated assets after employment ends.
For employers and retirement plan providers, the results point to the operational importance of withdrawal flexibility and ongoing investment guidance as more participants transition from contributing to retirement accounts to relying on those accounts for income.
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