Roth accounts, evolving distribution options, and other flexible plan features gained traction. The 24th edition of Vanguard’s comprehensive How America Saves industry report spotlights the behaviors of nearly 5 million Vanguard defined contribution (DC) participants. It provides a look at how plan design continues to shape retirement outcomes.

This detailed study of employer-sponsored retirement plans offers a blueprint for meeting the needs of all employees, setting them up for success at every stage of their lives, and enhancing outcomes through better plan design.

Resilient retirement behavior: Staying strong amid challenges

Despite economic pressures and uncertainties, retirement plan participants continued to make strides in 2024. A record 45% increased their deferral rates, and aggregate account balances rose by 10%.  

“As we examine more than two decades of retirement data, with various periods of market turbulence and economic volatility, it is clear that participants are incredibly resilient,” said Jeffrey W.  Clark, author of the report and head of defined contribution research at Vanguard. “For example, when analyzing the improvements in participation rate data over the past 20-plus years, there is no correlation to any economic or market volatility—only to plan designs. As automatic enrollment adoption increases, participation rates increase.”

Growing adoption of automatic enrollment: A positive shift

The adoption of automatic enrollment continues to accelerate. The share of plans adopting automatic enrollment has grown from 10% in 2006 to 61% in 2024. Larger plans—those with 1,000 or more participants—were more likely to implement automatic enrollment, with 78% doing so.

A growing number of plans offer automatic enrollment

Vanguard DC plans with employee-elective contributions

Vanguard DC plans with employee-elective contributions

Source: Vanguard 2025.


Roth usage: A growing trend

Contributions to Roth accounts—after-tax contributions that allow for tax-free withdrawals in retirement—continue to gain traction across various demographics, significantly among higher-income, longer-tenured participants. This trend is driven, in part, by enhanced plan availability and heightened tax awareness among retirement savers.   

The Roth option was offered by 86% of Vanguard plans at year-end 2024, and 18% of participants in these plans elected the option. That’s an all-time high. Thirty-six percent of plans offer Roth in-plan conversions (RIPCs), and 10% of plans offer an automatic RIPC feature to help participants maximize retirement plan savings.

Improved outcomes with professionally managed allocations

Plan sponsors are increasingly offering options that help with investing and planning decisions. At year-end 2024, 67% of participants were invested in a professionally managed allocation—60% in a single target-date or balanced fund, and 7% in a managed account. Vanguard research shows that these solutions offer more age-appropriate equity exposure, continuous rebalancing, and help participants stay the course. 

More participants use professionally managed allocations
Vanguard DC plans
Vanguard DC plans

Note: Bars in the chart may not align precisely with percentages because of rounding. 

Source: Vanguard 2025.

Need for financial well-being support: Addressing broader priorities

Plan sponsors and consultants advanced plan design features that drove participation rates to all-time highs in 2024. Still, there were signs of increased financial stress—modest increases in hardship withdrawals among them—which underscores the need for financial wellness support in addition to retirement plans. 

Among the ways plan sponsors have responded: providing access to financial advice to manage broader financial priorities and offering support for student loan repayment and emergency savings. 

“The modest increase in hardship withdrawals indicates a powerful need for financial wellness and emergency savings resources for workers,” Clark said. “Most retirement savers balance multiple short- and long-term financial goals, and employers are increasingly seeking ways to support employee financial wellness within and outside of the 401(k) plan. Out-of-plan emergency savings vehicles like Vanguard Cash Plus aim to empower workers to stay focused on retirement saving.”

Notes: 

All investing is subject to risk. 

Investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor in the fund would retire and leave the workforce. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in target-date funds is not guaranteed at any time, including on or after the target date. 

This document is not intended to provide tax advice or make and exhaustive analysis of the tax regime of the securities described herein. We strongly recommend seeking professional tax advice from a tax specialist.

The Vanguard Cash Plus Account is a brokerage account offered by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC. Under the Sweep Program, Eligible Balances swept to Program Banks are not securities: They are not covered by SIPC but are eligible for FDIC insurance, subject to applicable limits. Money market funds held in the account are not guaranteed or insured by the FDIC but are securities eligible for SIPC coverage. 

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