Strong markets get the credit. Autopilot is doing most of the work.
Vanguard's "How America Saves 2026" report shows 401(k) balances hit a record last year. The average account closed 2025 at $167,970, up nearly $20,000 from the year before.
The median - the balance that sits right in the middle of all savers - rose from $38,176 to $44,115.
Auto-enrollment is the headline. In 2006, only 10% of Vanguard's workplace plans automatically enrolled workers.
By 2025, 61% did. The default flips the choice for the worker.
People used to have to opt in. Now they have to opt out, and most do not bother.
So they save. And they keep saving as the plan steps up their rate on its own.
The result: 94% of active 401(k) savers saw their accounts grow last year, with median balances jumping 27% year over year. That is not just a market story.
It is a default story.
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Not every line in the report points up. Hardship withdrawals - early grabs from retirement money for things like medical bills or eviction - rose for a fourth year in a row.
Six percent of savers pulled from their plans in 2025, up from 5% the year before. Vanguard points to two reasons behind it.
The first is that inflation is still squeezing households. The second is that the rules to claim hardship are easier than they used to be, so more savers who qualify actually file.
Either way, more savers are dipping into long-term money for short-term needs. The retirement gap between men and women also keeps widening, which adds pressure on the same group most likely to tap savings early.
Average savings rates held steady. Workers put 7.6% of their pay into their plans in 2025, the same share as 2024.
A quarter of savers now defer more than 10% of their pay, up from 20% in 2016. So the high end of the pool is getting better while the low end is getting more strained.
The picture is two stories at once. Balances are higher than they have ever been, and more savers are tapping those balances early.
Both can be true at the same time. And in 2025, both were.
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