The Vanguard report shows 401(k) balances peaking as auto enrollment increases
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Americans’ contributions to their 401(k) savings accounts will reach a record high by 2025, according to a new report from Vanguard.
Among workers with active 401(k) accounts in December 2024 and December 2025, average account balances increased 27%, according to the report, titled How America Saves 2026.
Of those same participants, 94% saw an increase in their account balances, reflecting both increased contributions and stronger returns from the markets, according to the report.
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The average Vanguard 401(k) account balance was $167,970 in 2025, an increase of nearly $20,000 from the 2024 average of $148,153. The average account balance, meanwhile, rose year over year, from $38,176 in 2024 to $44,115 in 2025.
One factor the report cites as a possible impact on higher income is the change in automatic employee registration.
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Some employers have switched to automatically enrolling employees in 401k plans, with the share of defined contribution plans using Vanguard’s automatic enrollment sitting at 61% by 2025 compared to just 10% in 2006.
By restructuring the employee’s decision to retire, rather than making a voluntary choice, employers are encouraging more active participation in retirement plans, according to the report.
“With an autopilot design, individuals are automatically enrolled in the plan, their withdrawal amounts are automatically increased each year, and their contributions are automatically invested in a limited investment plan. In such a plan, the decision to save is misplaced: ‘Stop the plan if you like.’ And ‘doing nothing; leads to participation in plans and investments in long-term retirement portfolios,” the report said.
American flags on the floor of the New York Stock Exchange in New York, Aug. 18, 2025. (Michael Nagle/Bloomberg via Getty Images)
Employers deferred the same percentage of gross income into their plans in 2025 compared to 2024, although deferral rates have increased significantly over the past decade.
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The average deferral was 7.6% of workers’ income in 2025, the same as it was in 2024, according to the report. The average rate was 6.6% in 2025 compared to 6.7% in 2024.
A quarter of all participants had a deferral amount of more than 10% of their income. That’s compared to only 20% of participants who deferred more than one-tenth of their income in 2016, the report said.
A young man reviews bills at his desk and enters them into the computer. (Getty Images)
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The report was not all good. Hardship withdrawals rose for the fourth year in a row, rising to 6% in 2025 from 5% last year. While the report cited potential pressures from financial and other economic challenges, it also noted that recent adjustments to the hardship waiver application process “have made retirement assets more accessible in times of need.”
