Vanguard’s Latest Insights on Retirement Savings Trends
Vanguard has released the 24th edition of its flagship research report, How America Saves, offering an in-depth look at retirement savings trends based on nearly 5 million plan participants across over 1,400 retirement plans.
We’ve summarized the most compelling findings from the 100+ page report to help you understand the key shifts shaping retirement planning in 2025.
Top Takeaways from the 2024 Data
- 📈 All-time highs in plan participation and employee savings rates
- 🕒 Increased immediate plan eligibility and Roth feature availability
- 📊 Widespread adoption of professionally managed allocations, promoting disciplined investing
Plan Design
Plan design continues to play a critical role in encouraging participation and long-term savings. In 2024, 76% of Vanguard plans offered immediate eligibility, an increase from 71% in 2020. Automatic enrollment features are now used by 61% of plans, and these plans experience a participation rate of 94%, compared to just 64% for plans with voluntary enrollment.
Meanwhile, 96% of plans now include employer contributions in the form of Safe Harbor, matching, or profit sharing. Roth contributions are also on the rise, with 86% of plans now offering this option—marking five consecutive years of steady growth.
💡 Well-designed plans play a vital role in boosting engagement and long-term retirement outcomes.
Employee Deferrals
Employee savings rates have remained steady. The average participant contributes approximately 7.7% of their pay across all age groups. However, only one in four participants currently defers more than 10% of their income. This illustrates an opportunity for employers to encourage higher savings through education and features like auto-escalation.
Encouraging higher deferrals is key to improving retirement readiness.
Account Balances
The average participant balance in 2024 was $148,153. While balances naturally fluctuate with market conditions, they remain an important indicator of retirement readiness. The data suggests that balances are recovering and trending upward, though many participants may still need additional savings support depending on their age and retirement horizon.
Asset & Contribution Allocations
Vanguard participants continue to maintain strong exposure to equities, with an average allocation of 75%. Interestingly, about 7% of participants invest entirely in either equity or fixed income. These trends have remained consistent in recent years, signaling that participants are staying the course with their long-term investment strategies.
Plan Investment Options
Vanguard plans typically offer around 17 investment options. In contrast, iQ401k plans provide broader diversification by offering 30 to 40 funds. When it comes to Qualified Default Investment Alternatives (QDIAs), 89% of Vanguard plans have adopted one, whereas iQ401k plans boast a 100% adoption rate.
Additionally, nearly two-thirds of participants are invested in professionally managed allocations, which promote greater diversification and a more disciplined investment approach.
Plan Loans & Withdrawals
In 2024, 80% of Vanguard plans offered loans to participants, slightly down from the previous year. Meanwhile, 94% of plans allowed for hardship withdrawals—numbers that have remained consistent over the past five years. These features offer financial flexibility for participants but also highlight the importance of plan education and responsible use of retirement funds.
What This Means for Employers and Plan Sponsors
These insights reinforce the value of strong plan design, automatic features, employer incentives, and a well-structured investment menu. Employers and plan sponsors should evaluate whether their 401(k) offering aligns with today’s best practices.
Are you encouraging higher savings rates, offering Roth and managed options, and ensuring compliance with QDIA requirements? Now is the ideal time to reassess your plan and make enhancements that benefit both your organization and your employees. Contact us to learn more.