Americans’ contributions to their 401(k) savings accounts reached record levels in 2025, according to a new report from Vanguard.
Among active employees 401(k) accounts in December 2024 and December 2025, median account balances increased by 27%, according to the report titled How America Saves 2026.
Among those same participants, 94% saw an increase in their account balances, reflecting both increased contributions and strong market returns, according to the report.
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The average Vanguard 401(k) account balance was $167,970 in 2025, an increase of almost $20,000 from the 2024 average of $148,153. Meanwhile, the median account balance also increased year-over-year, from $38,176 in 2024 to $44,115 in 2025.
One of the factors cited by the report as a potential impact on higher contributions is a change in automatic employee enrollment.
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Some employers have opted to automatically enroll employees in 401k plans, with the share of Vanguard defined contribution plans using auto-enrollment rising to 61% in 2025, up from just 10% in 2006.
By reframing an employee’s decision to opt out rather than voluntarily enroll, employers encourage much greater participation in retirement plans, according to the report.
“Through an autopilot design, individuals are automatically enrolled in the plan, their deferral rates are automatically increased each year, and their contributions are automatically invested in a balanced investment strategy. In such a plan, the decision to save is framed negatively: “Leave the plan if you want. » And “do nothing; leads to plan participation and investment of assets in a long-term retirement portfolio,” the report said.
American flags on the floor of the New York Stock Exchange in New York on August 18, 2025. (Michael Nagle/Bloomberg via Getty Images)
Employees deferred a similar percentage of their total income into plans in 2025 compared to 2024, although deferral rates overall have trended upward over the past decade.
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The average deferral was 7.6% of an employee’s income in 2025, the same as in 2024, according to the report. The median rate was 6.6% in 2025 compared to 6.7% in 2024.
A quarter of all participants had a deferral rate greater than 10% of their income. This compares to just 20% of participants deferring more than a tenth of their income in 2016, the report notes.
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The report was not entirely positive. Hardship Withdrawals increased for the fourth consecutive year, rising to 6% in 2025 from 5% the previous year. Although the report discusses potential pressures from inflation and other economic challenges, it also notes that a recent streamlining of the hardship withdrawal application process has “made retirement assets more accessible in times of need.”
