Expert insight

The state of retirement readiness in three charts

October 20, 2025

More than 4 in 10 Americans are on track to maintain their current lifestyles in retirement, according to the latest Vanguard Retirement Outlook. Expanded access to defined contribution (DC) retirement plans has driven significant progress in recent decades, particularly for younger workers. Still, there are key opportunities for every generation to further strengthen their retirement readiness.

How retirement readiness stacks up across generations

Many Americans are on track to maintain their current lifestyles in retirement, especially those with access to DC plans. Our research shows the retirement outlook is brighter for younger generations, though. Nearly half of workers in Generation Z are projected to be financially ready for retirement, compared with 40% of baby boomers, despite carrying a greater debt burden than prior generations did when they were in the same age range. The main reason? Broader access to a stronger DC plan system.

These projections come from the Vanguard Retirement Readiness Model, which combines Vanguard’s capital markets forecasts with real-world national data on household balance sheets, saving rates, and spending patterns.

Gen Z is leading the way in retirement readiness

Four donut charts illustrate the respective percentage of individuals within different generations who are currently on track for retirement. The percentages of retirement readiness are: 47% of Gen Z, 42% of millennials, 41% of Gen X, and 40% of baby boomers.

Notes: We calculate the population share for each generation whose projected sustainable income exceeds spending needs during retirement.

Sources: Vanguard calculations, based on data from the Survey of Consumer Finances (SCF), the Health and Retirement Study (HRS), and the Social Security Administration (SSA).

DC plan access is a game-changer but not the only way to boost readiness

Employers and policymakers expanding access to DC retirement plans, combined with employees saving more, spending less, and working just two years longer until age 67, if possible, could dramatically improve retirement outcomes for millions of people.

Workers with access to a DC plan are twice as likely to reach their retirement savings goals as those without access to one. DC plans are especially helpful for younger workers, who benefit the most from potential long-term compounding. Universal access to a DC plan could increase the share of workers on track for retirement by 47 percentage points for Gen Z (doubling the current share) and 29 percentage points for millennials. Features like autoenrollment, automatic escalation of saving rates over time, and target-date funds have helped significantly improve savings behavior and investment outcomes. In 2022, the median worker with DC plan access had $83,000 in non-housing net wealth (1.3x their income), while the median worker without DC plan access had $13,000 (0.4x their income).

For workers in every generation, saving for longer, delaying Social Security in order to receive higher benefits later, and reducing the length of the retirement period could help—by between 7 and 16 percentage points. For younger generations, managing debt burdens will be key.

Quantifying the benefits of expanded access to DC plans and working 2 years longer

Four concentric donut charts show the respective percentage of each generation that is on track for retirement, along with projections for how working two additional years and having universal access to a defined contribution (DC) plan could improve these outcomes. For Gen Z members, retirement readiness increases from 47% to 58% if they work two years longer and to 94% if they all have access to a DC plan. For millennials, retirement readiness increases from 42% to 58% if they work two years longer and to 71% if they all have access to a DC plan. For Gen X members, retirement readiness increases from 41% to 53% if they work two years longer and to 48% if they all have access to a DC plan. For baby boomers, retirement readiness increases from 40% to 47% if they work two years longer and to 41% if they all have access to a DC plan.

Notes: We calculate the population share for each generation whose projected sustainable income exceeds spending needs during retirement in each scenario. In the “baseline” scenario, we assume workers retire and claim Social Security benefits at age 65 and that workers have different probabilities of future DC plan access based on their respective age and income level. In the “working 2 years longer” scenario, we assume workers retire and claim Social Security benefits at age 67 and that workers have different probabilities of future DC plan access based on their respective age and income level. In the “DC plan access for all” scenario, we assume all workers have access to a DC plan through their employers and thus save at higher rates, and that workers retire and claim Social Security benefits at age 65.

Sources: Vanguard calculations, based on data from the SCF, the HRS, and the SSA.

Among baby boomers, retirement readiness varies by income, but home equity can shift the odds

Retirement readiness varies widely by income for baby boomers, with readiness concentrated among the top 30% of income earners. And given the proximity to retirement for this generation, expanding DC plan access and working longer would be less helpful than for younger generations.

Nearly 9 in 10 baby boomers own a home, though, so tapping into home equity by downsizing, relocating to a lower-cost area, or selling a home and renting may be viable ways for many baby boomers to help bridge savings gaps.

In the lowest income category, only 15% of baby boomers are projected to be ready for retirement. However, that figure could jump to 42%—a little higher than the overall baseline baby-boomer average—by tapping into home equity.

Tapping into home equity could give a big boost to the least-prepared baby boomers

Five concentric donut charts show the respective percentage of baby boomers who are on track for retirement based on income level, as well as how tapping into home equity could increase the retirement readiness within each category. By leveraging home equity, retirement readiness is projected to increase from 40% to 60% for baby boomers as a whole. By income level, readiness would improve from 15% to 42% for those in the 0–29th percentiles, from 36% to 54% for those in the 30th–69th percentiles, from 59% to 78% for those in the 70th–89th percentiles, and from 92% to 95% for those in the 90th–99th percentiles.

Notes: We calculate the population share within each group whose projected sustainable income exceeds spending needs during retirement. In the “with home equity” scenario, we assume workers convert their home equity into investable assets by selling their homes and investing the proceeds. Per capita income ranges are as follows: 0–29th percentiles, $6,000–$37,000; 30th–69th percentiles, $38,000–$86,000; 70th–89th percentiles, $87,000–$148,000; and 90th–99th percentiles, $149,000–$436,000. Income figures are based on 2022 dollars and rounded to the nearest thousand.

Sources: Vanguard calculations, based on data from the SCF, the HRS, and the SSA.

The takeaway: Strong national progress, but opportunities remain

Retirement readiness is shaped by many factors, including retirement plan access, financial planning, and individual choices. From workers who are just starting their careers to those nearing retirement, making the most of available plans, saving consistently, working a bit longer, and considering home equity can help more Americans across all generations achieve a secure retirement.