Saving made easier. Solid stock market performance. Continued long-term focus. These are just some of the themes that defined 2025 for 401(k) retirement plan participants.
Additionally, enhanced plan designs and professionally managed allocations helped participants boost their saving rates and improve outcomes. This, combined with favorable market returns, helped push account balances to new highs.
For more, check out our annual early look at the trends and insights ahead of this year’s special 25th edition of How America Saves, which is coming in June.
Strong performance despite volatility
Higher balances
Strong market performance in 2025 led directly to substantial increases in retirement accounts:
- The average account balance of $167,970 was a 13% increase from year-end 2024.
- The median balance of $44,115 was a 16% increase over the same period.
Professionally managed allocations
A cornerstone of the improved investment outcomes has been the continued and growing adoption of professionally managed allocations, which include target-date funds, traditional balanced funds, and professional advice services. As of year-end 2025:
- 69% of participants were invested in a professionally managed allocation.
- Almost 80% of participants had access to a managed advice service, and nearly all had access to a target-date fund.
- Participant use of professionally managed allocations has increased by almost 50% over the last decade.
Improved saving rates
- 14% of participants voluntarily increased their deferral rate.
- 31% increased their deferral rate from their plan’s annual automatic escalation.
Progress, with more to do
While significant progress was made in 2025, plan sponsors still have opportunities to strengthen their plans and further support their employees.
Plan sponsors who haven’t yet adopted automatic solutions can consider doing so. Automatic enrollment and automatic increases—along with higher default saving rates and larger employer matches—can help their employees be better prepared for retirement.
Of course, it’s not just about retirement. For participants with competing priorities such as student loans, credit card debt, and health care expenses, plan sponsors can consider introducing an advice service to provide guidance for overall financial well-being.
For a deeper dive into what to expect from this year’s How America Saves special edition, don’t miss our preview.
Notes:
All data, Previewing How America Saves 2026.
Past performance is no guarantee of future results.
All investing is subject to risk, including the possible loss of the money you invest.
Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
