SlateStone Wealth’s Chief Market Strategist, Kenny Polcari, recently discussed the current state of the investment landscape, addressing the growing dependence on artificial intelligence, the anticipated IPO of SpaceX, and his outlook for market trends. His insights came during an appearance on ‘Varney & Co.’
A new report from Vanguard reveals a significant increase in Americans’ contributions to their 401(k) savings accounts, marking record highs in 2025. The report titled “How America Saves 2026” highlights that among employees with active 401(k) accounts as of December 2024 and December 2025, median account balances rose by an impressive 27%. Notably, 94% of these account holders experienced growth in their balances, attributed to both increased contributions and strong market performance.
The average 401(k) account balance for Vanguard participants reached $167,970 in 2025, which is a nearly $20,000 rise from the previous year’s average of $148,153. Additionally, the median account balance saw a yearly increase, climbing from $38,176 in 2024 to $44,115 in 2025.
One key factor driving higher contributions is the trend towards automatic employee enrollment in 401(k) plans. The report indicates that by 2025, 61% of Vanguard-defined contribution plans utilized automatic enrollment, a stark contrast to just 10% in 2006. This shift reframes the decision-making process for employees, moving it from a voluntary opt-in to an opt-out approach, significantly boosting participation in retirement plans.
The report explains, “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.” It emphasizes that the decision to save is framed negatively, making the option to “quit the plan” the exception rather than the rule, thereby fostering a culture of savings.
In terms of deferral rates, employees maintained a similar percentage of total income contributions in 2025 compared to 2024, continuing the upward trend observed over the past decade. The average deferral rate remained at 7.6%, the same as the previous year, while the median rate decreased slightly from 6.7% in 2024 to 6.6% in 2025. Notably, 25% of participants deferred over 10% of their income, up from 20% in 2016.
However, the report also highlighted rising concerns, as hardship withdrawals from 401(k) accounts increased for the fourth consecutive year, reaching 6% in 2025, up from 5% in 2024. The report attributes some of this rise to pressures from inflation and economic challenges. At the same time, it notes that recent adjustments to the application process for hardship withdrawals have made it easier for individuals to access their retirement assets during tough times.
Together, these findings not only illustrate the rising financial awareness among Americans but also underscore the ongoing challenges they face, prompting discussions around policy and market dynamics in the context of retirement savings.
