Research summary

U.S. retirement outlook: Our 2025 report recap

November 04, 2025

The Vanguard Retirement Outlook offers a sweeping view of how Americans are preparing for retirement—and where the nation’s retirement system is gaining strength. By analyzing retirement readiness across generations, income levels, and access to defined contribution (DC) plans, the report reveals encouraging progress, especially among younger workers, while highlighting gaps that remain.

Gen Z and millennials on track

Workers in the Generation Z and millennial cohorts are on track to be better prepared for retirement than those in older generations, thanks to broader access to DC plans and stronger retirement plan design. Nearly half of Gen Z workers and 42% of millennials are projected to maintain their current standard of living in retirement, slightly ahead of the 40% projected for baby boomers approaching retirement.

While many young workers face significant debt burdens—student loans, auto loans, and credit card debt consume about a quarter of Gen Z and millennials’ income at the median—expanded DC plan access and improved plan features are helping them build retirement security. Continued progress will depend on how effectively they can balance their overall financial wellness.

“Younger workers are benefiting from better plan design features like autoenrollment, automatic escalation of saving rates over time, and investment in qualified default investment alternatives, but managing debt remains essential,” said Nicky Zhang, a Vanguard investment strategist and co-author of the research paper. “Supporting overall financial wellness with effective planning tools is key to helping the next generation achieve lasting retirement security.”

Retirement readiness improves for younger generations

A figure comparing retirement readiness across four generations defined by age as of 2025: Gen Z, ages 24–28; millennials, ages 29–44; Gen X, ages 45–60; and baby boomers, ages 61–65. Donut charts show the percentage of each generation on track for retirement: 47% for Gen Z, 42% for millennials, 41% for Gen X, and 40% for baby boomers. Bar charts show the annual spending gap or surplus for a median worker earning $51,000 in each generation. For Gen Z, there is a gap of $3,000, or 7% of spending needs. For millennials, there is a gap of $4,000, or 11% of spending needs. For Gen X, there is a gap of $6,000, or 18% of spending needs. For baby boomers, there is a gap of $9,000, or 24% of spending needs.

Notes: We calculate the population share for each generation whose projected sustainable income exceeds their spending needs during retirement. The incomes for the median worker in each generation are as follows: Gen Z, $27,000; millennials, $49,000; Gen X, $59,000; and baby boomers, $56,000. Figures are based on 2022 dollars and rounded to the nearest thousand.

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 doubles retirement readiness

Across all generations, access to workplace retirement plans is a game changer. Workers with access to DC plans are nearly twice as likely to be on track for retirement (54%) compared with those without access (28%). These plans are transforming retirement outcomes, especially for younger generations, by making saving easier and more effective through features like autoenrollment, automatic escalation, and the ability to invest in target-date funds. According to previous Vanguard research, DC plan participation and eligibility rates are at all-time highs, helping more workers build long-term financial security.

Expanding access to workplace retirement plans could improve outcomes even further: If all workers had access to a DC plan, about 6 in 10 Americans would be on track for retirement.

Expanded DC plan access and more working years could improve retirement outcomes

A figure comparing retirement outcomes across three scenarios: Baseline, DC plan access for all, and working two years longer. Donut charts show the percentage of the population on track for retirement in each scenario: 42% in the baseline, 61% with DC plan access for all, and 55% if working two years longer. Bar charts show the annual spending gap or surplus for the median worker earning $51,000 in each scenario. In the baseline, there is a gap of $5,000, or 13% of spending needs. With DC plan access for all, there is a surplus of $1,000, or 3% of spending needs. In the working two years longer scenario, the gap is zero.

Notes: For each scenario, we calculate the population share whose projected sustainable income exceeds their spending needs during retirement. 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 age and income. In the “DC plan access for all” scenario, we assume all workers have access to DC plans through their employers and therefore save at higher rates, and that workers retire and claim Social Security benefits at age 65. 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 age and 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.

Covering baby boomer savings shortfalls

Among baby boomers approaching retirement, readiness varies widely by income. The top 30% of earners are generally well prepared, while many others may face significant gaps. The median baby boomer is projected to need to replace 31% of their pre-retirement income through private and employer retirement savings, with an annual shortfall of $9,000, or almost a quarter of their expenses.

To address potential spending gaps, baby boomers across income levels may need to consider options like tapping home equity, reducing spending, or working two additional years, if possible. Home equity can be a powerful lever across the income spectrum, especially for those in the lower 70% of the income distribution.

Practical steps to strengthen retirement readiness

“Our research shows that even small changes can make a meaningful difference in retirement readiness,” said Fu Tan, a Vanguard investment strategist and co-author of the paper. “For many, the path to greater retirement security isn’t about dramatic sacrifices. It can be achieved by making smart use of retirement plans and savings vehicles, considering part-time work, or simply allowing a bit more time before retiring. Even delaying retirement by two years, if possible, could help about 1 in 8 more Americans get on track for a secure retirement.”

The path forward for retirement readiness

The Vanguard Retirement Outlook highlights encouraging momentum in retirement readiness. Broader access to savings plans, smarter financial strategies, and improved financial literacy are helping more Americans build retirement security. That’s particularly true for younger generations, who are participating in greater numbers and benefiting from improved retirement plan features. Continued collaboration among individuals, employers, and policymakers can help build on this progress and support even stronger retirement outcomes for all.