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Changes to retirement accounts are leading to increased savings

A Vanguard report credits improvements in 401(k) account designs

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Photo by Jamie Street on Unsplash

Key Insights

  • Record-breaking 45% of retirement plan participants increased their savings in 2024, according to Vanguard.
  • Improved plan design, like automatic enrollment and higher default rates, drives early and consistent saving.
  • More workers rely on professional investment support, and Roth contributions reach all-time highs.

A new report from Vanguard reveals that U.S. workers have stepped up their game when it comes to saving for retirement. The report credits significant improvements in 401(k) plan design. 

According to the 2025 edition of How America Saves, the average participant’s savings rate reached a new record, with 45% of savers increasing their contribution rates in 2024 alone, another all-time high. 

Vanguard’s annual study draws insights from nearly five million retirement plan participants across the country.

“Today’s 401(k) plans are not just about saving; they’re about building a financial future for millions of Americans,” said Lauren Valente, managing director of Vanguard Workplace Solutions. The report credits widespread enhancements in retirement plan structures—such as automatic enrollment, higher default deferral rates, and easier eligibility—as key drivers behind improved saving behavior.

  • 76% of plans now offer immediate eligibility, up from previous years.
  • 61% of auto-enrollment plans set default deferral rates at 4% or higher, encouraging participants to save more from the start.
  • 18% of savers are now making Roth contributions, also a record, reflecting growing tax awareness and strategy among participants.

Investing smarter

Participants aren’t just saving more, they’re also investing smarter. Two-thirds of Vanguard retirement plan participants have their entire 401(k) portfolio professionally managed, often through target-date funds or managed accounts. This shift suggests an increasing reliance on guided investment strategies to ensure long-term success.

Despite the encouraging trends, the report notes that some savers still tap into their retirement funds due to financial pressures. In 2024, 4.8% of participants initiated a hardship withdrawal, a slight increase from prior years. Still, the vast majority—95%—preserved their retirement savings, underscoring both progress and ongoing challenges.