Key facts
- Retirement plan participation among eligible U.S. workers reached a record 86% in the past year.
- The average combined employee and employer savings rate reached a record 12.1% in 2025.
- Average retirement account balances increased by 13% year-over-year.
- Nearly 70% of participants now use professionally managed investment portfolios.
- Home equity is increasingly being considered as a retirement income source, with reverse mortgages gaining attention.
- Increased hardship withdrawals signal ongoing financial pressures for many workers.
Retirement plan participation among eligible U.S. workers reached a record 86% last year, according to Vanguard's 2026 How America Saves report. This increase, observed across nearly 5 million defined contribution plan participants, is attributed to the expanded use of automatic enrollment, higher default contribution rates, and the prevalence of professionally managed investments over the past 25 years.
Participants are also saving more, with 45% increasing their contribution rates in 2025. This pushed the average combined employee and employer savings rate to a record 12.1%. Average account balances saw a 13% increase year-over-year, supported by contributions and market performance. Investment behavior remained stable, with only 5% of participants altering their allocations. Nearly 70% of participants now utilize professionally managed investment portfolios, and employer matching contributions averaged a record 4.7%.
Concurrently, home equity is gaining traction as a retirement planning tool, with reverse mortgages being marketed as flexible financial solutions rather than last resorts. Despite demographic trends supporting demand, the reverse mortgage market experienced a decline in loan volume in May, with higher interest rates and softening home prices impacting principal limits and cash-to-close requirements for borrowers. Lenders are also targeting affluent homeowners with proprietary reverse mortgages as wealth management tools.
Despite these improvements in retirement savings, many workers continue to face financial pressures. Vanguard noted an increase in hardship withdrawals, indicating ongoing challenges with financial resilience. The report emphasizes the need to help Americans manage short-term financial demands while ensuring long-term retirement security.