The latest Vanguard data shows encouraging signs for American retirement preparedness, with average account balances reaching record highs even as challenges persist for many savers.
As one of the largest retirement plan administrators in the United States, Vanguard provides valuable insights into how Americans are saving for retirement through their annual “How America Saves” report. According to Vanguard’s How America Saves 2025 report, retirement account balances reached record highs in 2024, with the average participant account balance climbing to $148,153 by year-end—a 10% increase from 2023.
However, understanding the full picture requires looking beyond averages to examine median savings figures, which often provide a more realistic view of typical American retirement preparedness.
The Reality Behind the Numbers
In 2023, the average account balance for Vanguard participants was $134,128; the median balance was $35,286. This significant gap between average and median reveals an important truth about retirement savings: while some Americans have accumulated substantial nest eggs, many others are struggling to save adequate amounts.
The median figure is particularly telling because it represents the midpoint where half of all participants have saved more and half have saved less. Individuals under 25 have the lowest average savings of $7,351 and a median savings of $2,816, which may be due to factors like lower earned income, less time to save, student loan debt, or not recognizing the importance of saving early for retirement. Savings grow progressively across age groups, peaking at an average of $272,588 and a median of $88,488 for those age 65 and older.
Age Makes a Dramatic Difference
The data reveals stark differences in retirement savings across age groups. Young workers face multiple barriers to saving, including lower incomes, student debt, and competing financial priorities. However, those who start early benefit enormously from compound growth over time.
For workers approaching retirement, the numbers show the cumulative effect of decades of saving and market growth. The substantial gap between younger and older savers underscores why financial experts consistently emphasize starting retirement savings as early as possible, even with small amounts.
The Power of Plan Design
One of the most significant findings from Vanguard’s research concerns the impact of automatic enrollment on saving behavior. Plan sponsors and consultants advanced plan design features that drove participation rates to all-time highs in 2024.
Forty-five percent of participants also increased their deferral rate in 2024, either on their own or as part of an automatic annual increase. That’s an all-time high since we started tracking that metric in 2019. This demonstrates how well-designed retirement plans can significantly improve outcomes for participants.
The research consistently shows that employees in automatic enrollment plans save substantially more than those in voluntary enrollment plans. As a result of these autoenrollment plans, employees at firms that offer them are saving roughly 65% more for retirement compared with those at firms with voluntary enrollment.
Current Saving Rates and Recommendations
Vanguard suggests that you save 12% to 15% of your pay each year for retirement, including any employer contributions. However, the current reality shows room for improvement. The average investor is saving 10.7% in their retirement plan, which includes their employer’s contributions.
This 10.7% average falls short of Vanguard’s recommended range, indicating that many Americans need to boost their savings rates to achieve adequate retirement income. The good news is that this gap isn’t insurmountable—That’s just two percentage points away from the suggested range.
Economic Pressures and Adaptation
Despite positive trends in account balances, there were signs of increased financial stress—modest increases in hardship withdrawals among them—which underscores the need for financial wellness support in addition to retirement plans. This reflects broader economic pressures that many Americans face, including inflation and competing financial priorities.
There are also signs that Americans may be saving less: 68% of Americans have not been able to contribute to their savings as much due to inflation, while 51% have stopped or reduced retirement savings, according to the 2024 Q4 Quarterly Market Perceptions Study from Allianz Life.
Investment Strategy Evolution
The data shows positive trends in how participants are investing their retirement savings. We’ve hit a record high with 67% of participants opting for professionally managed allocations like target-date funds or managed accounts. This shift toward professional management typically results in better-diversified portfolios and more age-appropriate asset allocation.
Looking Forward: Practical Steps for Improvement
For individuals reviewing their own retirement savings progress, the Vanguard data suggests several actionable strategies:
Start with incremental increases: Even small improvements in savings rates can make a significant difference over time. One percentage point more of your salary might cost less than a pizza per week.
Leverage automatic features: If your employer offers automatic enrollment or automatic increase features, take advantage of them. The data clearly shows these tools help participants save more effectively.
Consider professional management: With the majority of successful savers using target-date funds or managed accounts, these options deserve serious consideration for their diversification and professional oversight benefits.
Focus on what you can control: While market volatility and economic uncertainty create challenges, Most retirement savers balance multiple short- and long-term financial goals, and employers are increasingly seeking ways to support employee financial wellness within and outside of the 401(k) plan.
The Bigger Picture
Vanguard’s median retirement savings data provides both encouragement and a call to action. While record-high account balances demonstrate that the retirement system can work effectively, the wide gap between averages and medians reveals that many Americans still face significant challenges in building adequate retirement savings.
The success of automatic enrollment features and professionally managed investments shows that thoughtful plan design can dramatically improve outcomes. As more employers adopt these best practices and more workers benefit from them, we may see continued improvement in median savings figures over time.
For individual savers, the key takeaway is clear: start early if possible, save consistently, take advantage of employer benefits, and don’t be discouraged if your current balance seems low compared to averages. The median figures show you’re not alone, and even modest improvements in savings behavior can lead to substantially better retirement outcomes over time.
