Vanguard's 25th annual How America Saves report, based on data from nearly five million participants across roughly 1,300 defined contribution plans, shows that automatic enrollment and plan design improvements have driven participation and savings rates to new highs in 2025. The report, released after a preview earlier this year, highlights that 61% of Vanguard plans now use automatic enrollment, up from 10% in 2006 when the Pension Protection Act took effect. Among larger plans with at least 1,000 participants, adoption reached a record 79%.
Automatic features have become the norm: 62% of automatic enrollment plans default participants at a deferral rate of 4% or higher, with nearly half of those at 6% or more, compared to 43% in 2015. Over 70% of these plans also include automatic annual escalation features. The result is a 94% participation rate in plans with automatic enrollment, versus 64% in voluntary enrollment plans. Overall, the plan-weighted participation rate across all Vanguard plans hit a record 86%.
Savings rates and account balances also reached new peaks. The total average contribution rate—combining employee and employer contributions—held at 12.1% in 2025, an all-time high and nearly two percentage points above a decade ago. Vanguard estimates participants should target 12% to 15% to save effectively; 51% met or exceeded that threshold in 2025, up from 47% in 2021. Average account balances climbed 13% year over year to $167,970, while median balances rose 16% to $44,115. Among participants who held accounts throughout 2025, the median balance increased 27%, with 94% seeing growth.
The disparity between average and median balances reflects a skewed distribution: one in four participants had balances below $10,000, while 35% had balances exceeding $100,000 and 18% held $250,000 or more. Strong equity market returns—the S&P 500 gained approximately 16% in 2025—contributed significantly to balance growth. Balances varied by industry: media, entertainment, and leisure sector participants averaged about $252,000, while those in transportation, utilities, and communications averaged just over $113,000.
Target-date funds (TDFs) continue to dominate. In 2025, 69% of Vanguard participants were invested in a professionally managed allocation, up from 9% in 2005 and 48% in 2015. Ninety-six percent of Vanguard plans offered TDFs, and 84% of participants used them when offered. Among TDF investors, 73% held a single fund aligned with their expected retirement date. TDFs now make up 45% of all assets within plans offering such strategies, compared to 28% in 2016, and 64% of all plan contributions flowed into those funds last year.
Company stock holdings remain marginal. Only 8% of Vanguard plans offered company stock as an investment option, and 93% of participants had no company stock holdings. Just 2% held a concentrated position of more than 20% in company stock, down from 6% in 2016. Plans making employer contributions in company stock averaged 19% of plan assets in that option, versus 6% for plans offering company stock but contributing in cash.
Despite market volatility in spring 2025, only 5% of non-advised participants made any trades during the year, matching the prior year's record low. For participants invested solely in a single target-date fund, just 1% traded. The average one-year participant total returns reached 19.3% in 2025, while personalized returns averaged 17.9%. Five-year annualized returns averaged 9.0%.
The report also notes that participant portfolios have improved dramatically over the past 20 years. In 2025, only 2% of participants held no equities, down from 13% in 2006, and just 2% held more than 20% in a single company's stock, compared with 18% in 2005. For advisors, these trends underscore the importance of plan design and the growing role of target-date funds in retirement savings. For more on retirement plan trends, see Edward Jones Adds JPMorgan, T. Rowe Price to Retirement Platform and Warren Demands White House Clarify Social Security Retirement Age Plans.
