Retirement plan participants’ saving behaviors remained strong in 2025, driven by widespread automatic enrollment, record default rates and higher employer matching contributions, Vanguard found in its latest “How America Saves” report.
Over the past 25 years, defined contribution plan participation increased to 86% from 65%, reflecting the widespread adoption of automatic enrollment and its role in bringing more workers into the system, according to the report. The participation rate grew 1 percentage point over the year and 5 percentage points since 2017.
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“We’ve really shifted from a system that relies on individual actions to one powered by automatic solutions,” says Jeff Clark, Vanguard’s head of defined contribution research and the report’s author. “These stronger defaults continue to drive better outcomes for American workers.”
Defaults, Deferrals and Matches
Deferral rates rose to an all-time high over the past decade, with 62% of plans defaulting employees at a deferral rate of at least 4% in 2025, compared with 43% of plans in 2015.
Additionally, 45% of participants increased their savings rate in 2025, contributing to a combined, average employee and employer contribution rate of 12.1%—an all-time high first reached in 2024. The average employee deferral in 2025 was 7.6%, down just 0.01 percentage point from 2024, and the median rate was 6.6%.
Last year, 71% of plans using automatic enrollment also automatically increased participant deferral rates annually.
Average and median deferral rates have generally increased over the past 10 years, with the average total saving rate increasing by nearly 2 percentage points, Vanguard reported.
The average employer-promised matching contributions have risen over time as well, reaching a record 4.7% of pay in 2024 and continuing at that level in 2025. While the average employer-promised matching contribution varied substantially across plans last year, most plans with a single or multi-tier match formula promised a match between 3% and 6.99%. The median match was 4%.
Account Balances
The average account balance increased by 13% from 2024 to 2025 to $167,970, reflecting improved saving behavior and long-term market participation, the report suggested. The median participant balance, though much lower at $44,115, still reflected a 16% increase over the prior year.
The report explained that while average balances are more representative of the results experienced by longer-tenured, more affluent or older participants, median balances represent the typical participant. Some 26% of participants had an account balance of less than $10,000 last year, while 35% of participants had a balance of more than $100,000.
Professionally Managed Allocations
The growing proportion of participants using professionally managed account allocations has also helped drive positive outcomes, Vanguard reported.
A record high of 69% of participants were invested in a professionally managed allocation in 2025, up from 9% at year-end 2005, 48% at the end of 2015 and 67% as of December 31, 2024. Of the participants using a professionally managed solution last year, 62% of the total were invested in a single TDF or balanced fund, and 7% had a managed account.
The report stated that professionally managed investment options “signal a shift in responsibility for investment decision-making away from the participant and toward employer-selected investment and advice programs.”
Clark says professional management gained traction largely due to its ability to help participants diversify investments and rebalance portfolios easily when necessary. He also credits the rise to a connection between professional management and defaults. Nearly all (98%) plans with auto-enrollment defaulted participants into a TDF last year—a prime example of a professionally managed investment vehicle.
Staying the Course
Despite periods of market volatility last year, most notably following President Donald Trump’s announcement of new tariffs in April, participants stayed the course with their retirement investments. Only 5% of participants traded in 2025, a decrease of 5 percentage points from those who did so during 2020.
Participants who were pure target-date fund investors were much less likely to trade than all other investors. Only 1% of all pure TDF investors changed their investments last year.
During 2025, the average plan asset allocation to target-date funds increased to 45% from 42% in 2024. Among all Vanguard plans, 86% offered TDFs, and 84% of participants used them when offered. Of all TDF investors, 73% had their entire account invested in a single TDF.
Roth Contributions
The option to make after-tax contributions continued to attract some investors last year—and will likely do so in the year ahead, Vanguard concluded. At year-end 2025, 98% of Vanguard plans offered Roth contributions. Among participants, 18% elected the after-tax option, consistent with the 2024 figure.
Given the mandate that requires higher-earning participants to make age-based catch-up contributions on a Roth basis, enabled by the SECURE Act 2.0 of 2022 and effective January 1, Clark says he would expect to see a higher proportion of participants utilizing Roth when the firm collects 2026 data. Nonetheless, and independent of income level, younger participants—those between the ages of 25 and 34—were the most likely to leverage Roth contributions last year, signaling a trend potentially worth tracking in the years ahead, the report suggested.
Vanguard drew data from more than 1,300 qualified plans covering nearly 5 million participants for which the firm provides recordkeeping services. The universe of plan sizes ranged from fewer than 500 participants to more than 5,000.
