Vanguard Retirement Outlook Shows Positive Momentum Nationally

Younger Generations Continue to Reap Benefits of Improving Retirement System

VALLEY FORGE, Pa., Oct. 14, 2025 /PRNewswire/ -- Vanguard today released its Vanguard Retirement Outlook, reporting that 42% of Americans are currently on track to achieving retirement security. The comprehensive analysis uses the Vanguard Retirement Readiness Model* (VRRM), which builds on expertise garnered from Vanguard's fifty-plus years serving individual investors.

The research evaluates retirement readiness of American workers and shows that access to employer-sponsored defined contribution (DC) plans remains a critical factor in retirement success. Workers with DC plan access are twice as likely to reach their savings goals compared to those without. If DC plan access were available to all workers, retirement readiness could increase by 19 percentage points. Working two years longer—until age 67—could add another 13 percentage points to readiness.

"Expanding access to defined-contribution plans and improving plan design has dramatically improved retirement outcomes," said Fiona Greig, Ph.D. Global Head of Investor Research and Policy, and co-author of the report. "Our research shows that features like autoenrollment and higher default saving rates are helping more Americans build retirement wealth."

Across all income levels, Gen Z and millennials are projected to be better prepared for retirement than baby boomers and Gen X, thanks to broader DC plan access and stronger plan design. About 47% of Gen Z and 42% of millennials are on track for retirement. However, debt burdens—especially student loans—remain a significant challenge for many. Millennials' debt burden (25% of income) reduces their retirement success probability by 9 percentage points to 42%. The financial strain of this debt burden poses a significant challenge for younger individuals trying to save for retirement, and emphasizes the importance of financial wellness, advice and emergency savings.

Among older generations, we find that nearly 40% of all baby boomers and Gen X workers are on track for retirement, with higher-income workers substantially better prepared. The median-income baby boomers will be able to replace 56% of their pre-retirement income, with an annual spending shortfall of $9,000, or 24% of their overall spending needs. For Generation X, the outcome improves with the median spending shortfall reduced to $6,000 annually, accounting for 18% of their overall retirement spending needs.

While the retirement outlook is enhanced for younger generations, two key levers would lead to greater improvements—continued expansion of DC plan access and two additional years of work, which may become the norm for younger generations. For older generations, tapping into home equity presents an additional opportunity to help close retirement spending gaps and enhance financial security.

"Retirement readiness isn't just about saving—it's about having the right tools, support, and access throughout a worker's career," said Kelly Hahn, Vanguard's Head of Retirement Research, and co-author of the report. "Retirement security is a shared responsibility. Policymakers, employers, and individuals all have a role to play in building a more resilient future."

The outlook for retirement readiness in the U.S. presents both challenges and opportunities. While about 4 in 10 Americans are currently on track to maintain their lifestyle in retirement, the impact of DC plans highlights an important path toward building a stronger retirement system. Expanding access to DC plans and building on their proven success offers a tremendous opportunity to improve financial security for millions of Americans.

*Vanguard Retirement Readiness Model (VRMM): The model is a quantitative framework used to assess retirement readiness across American workers. It integrates individual factors—such as age, income, savings, retirement plan access, and spending goals—with simulated wealth projections based on Vanguard's capital markets model (VCMM) forecasts. The model is calibrated using data from the Federal Reserve's 2022 Survey of Consumer Finances, retirement spending insights from the Health and Retirement Study, and mortality tables from the Society of Actuaries. The model produces two key metrics: the population share on track for retirement and the annual spending gap or surplus. In this edition, the model includes major upgrades: individual-level stochastic simulations, income volatility, age-based spending reductions, and a revised confidence threshold.

About Vanguard
Founded in 1975, Vanguard is one of the world's leading investment management companies. The firm offers investments, advice, and retirement services to tens of millions of individual investors around the globe—directly, through workplace plans, and through financial intermediaries. Vanguard operates under a unique, investor-owned structure where Vanguard fund shareholders own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit vanguard.com.

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SOURCE The Vanguard Group