Hand holding smartphone displaying rising 401(k) balance on wooden desk
Americans saw their 401(k) savings accounts reach record levels in 2025, with median balances climbing by a significant 27% compared to the previous year. This surge is attributed to a combination of increased contributions and positive market returns, according to a report by Vanguard.
The report, titled “How America Saves 2026,” revealed that among participants with active accounts in both December 2024 and December 2025, 94% experienced growth in their balances. The average account balance for a Vanguard 401(k) stood at $167,970 in 2025, an increase of nearly $20,000 from the 2024 average. The median account balance also saw a healthy rise, moving from $38,176 in 2024 to $44,115 in 2025.
A key factor contributing to this rise in participation and balances is the growing adoption of automatic employer enrollment. In 2025, 61% of Vanguard-defined contribution plans utilized automatic enrollment, a substantial jump from just 10% in 2006. This strategy reframes the decision to save as an opt-out process, encouraging greater employee engagement in retirement plans.
While deferral rates remained relatively stable, with the average at 7.6% and the median at 6.6% in 2025, the report noted a long-term upward trend in these rates over the past decade. A quarter of all participants were deferring over 10% of their income in 2025, up from 20% in 2016.
However, the report also highlighted a concerning trend: hardship withdrawals increased for the fourth consecutive year, reaching 6% in 2025 from 5% in 2024. While potential economic pressures like inflation may be a factor, the report also points to recent streamlining of the hardship withdrawal application process as a contributor to increased accessibility of retirement assets during times of need.
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