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SlateStone Wealth chief market strategist Kenny Polcari discusses whether investors are too dependent on AI, Space X’s IPO and his outlook for the markets on ‘Varney & Co.’<\/p>\n
Americans’ contributions to their 401(k) savings accounts hit record highs in 2025, according to a new report from Vanguard.\u00a0<\/p>\n
Among employees with active 401(k) accounts in both December 2024 and December 2025, median account balances increased by 27%, according to the report, titled How America Saves 2026.\u00a0<\/p>\n
Of those same participants, 94% saw an increase in their account balances, reflecting both a rise in contributions and strong returns from markets, according to the report.\u00a0<\/p>\n
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People review tax forms on a laptop computer. (iStock)<\/p>\n
The average account balance for a Vanguard 401(k) was $167,970 in 2025, a near $20,000 increase from the 2024 average of $148,153. The median account balance, meanwhile, also increased year over year, rising from $38,176 in 2024 to $44,115 in 2025.\u00a0<\/p>\n
One factor the report cites as a potential impact on the higher contributions is a shift in automatic employee enrollment.\u00a0<\/p>\n
BEWARE THE TICKING TIME BOMB HIDING IN YOUR 401(K)<\/p>\n
Some employers have shifted to automatically enrolling employees in 401k plans, with the share of Vanguard-defined contribution plans using automatic enrollment sitting at 61% in 2025 compared with just 10% in 2006.\u00a0<\/p>\n
By reframing an employee’s decision into opting out, rather than voluntarily opting in, employers encourage significantly stronger participation in retirement plans, according to the report.\u00a0<\/p>\n
“With an autopilot design, individuals are automatically enrolled into the plan, their deferral rates are automatically increased each year, and their contributions are automatically invested in a balanced investment strategy. In such a plan, the decision to save is framed negatively: \u2018Quit the plan if you\u2019d like.’ And \u2019doing nothing; leads to participation in the plan and investment of assets in a long-term retirement portfolio,” the report states.<\/p>\n
American flags on the floor at the New York Stock Exchange in New York, on Aug. 18, 2025. (Michael Nagle\/Bloomberg via Getty Images)<\/p>\n
Employees deferred a similar percentage of their total incomes into plans in 2025 when compared with 2024, though deferral rates have broadly trended up in the last decade.<\/p>\n
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The average deferral was 7.6% of an employee’s income in 2025, the same as it was in 2024, per the report. The median rate was 6.6% in 2025 compared with 6.7% in 2024.\u00a0<\/p>\n
A quarter of all participants had a deferral rate of over 10% of their incomes. That compared with just 20% of participants deferring more than a tenth of their income in 2016, the report noted. \u00a0<\/p>\n
A younger person reviews bills on their desk and inputs them into a computer. (Getty Images)<\/p>\n
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The report wasn’t all positive. Hardship withdrawals increased for the fourth straight year, rising to 6% in 2025 from 5% the previous year. While the report cited potential pressures from inflation and other economic challenges, it also noted that a recent streamlining in the process to apply for hardship withdrawals has “made retirement assets more accessible in times of need.”<\/p>\n
#Vanguard #report #shows #401k #balances #hit #highs #automatic #enrollment #spikes<\/p>\n","protected":false},"excerpt":{"rendered":"
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