Vanguard's 2025 401(k) report found 51% of participants at target savings levels despite record 86% participation among eligible workers in its plans. Yet 38% of auto-enrollment plans default to 3% of pay or less; Vanguard recommends 12%–15% of pay, including employer match.
The report covers nearly five million workplace retirement accounts through 2025. Average combined contributions—worker deferrals plus employer match—reached a record 12.1% of pay. Still, 22% of participants deferred less than 4% of income, while only 25% saved more than 10%. For a $90,000 earner contributing 3% and receiving the average 4.7% employer match, the combined rate is 7.7%, or $3,870 a year below Vanguard's 12% floor. At a 7% average annual return over 30 years, that gap would mean roughly $365,000 in foregone savings, the article's projection says.
Automatic annual deferral increases appear in 71% of auto-enrollment plans. But 40% of those plans cap the deferral rate at 10% of pay, affecting 43% of participants using the feature. Vanguard recommends ceilings that allow total savings, including employer contributions, to reach at least 15%; only one-third of plans set caps between 11% and 15%. A worker starting at 3% and increasing by one percentage point a year would reach a 10% cap after seven years.
