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Key Takeaways
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More 401(k) investors are leaving their accounts alone, even when there are major market shifts, partly thanks to the growing use of target-date funds.
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Record account balances in 2025 resulted from automatic savings increases and strong market returns.
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Hardship withdrawals are rising, suggesting that better plan design isn’t helping everyone equally.
A Vanguard report out this week finds that American retirement savers are getting better at leaving their 401(k)s alone, with fewer investors tempted to tinker with their retirement accounts when major news hits the stock market.
The report suggests that’s because many savers are landing in professionally managed options, such as target-date funds, that handle the buy-and-hold discipline for them. That can be hard to do in times of market turbulence and economic anxiety, but most experts recommend selecting a suitable, low-cost investment and automating your contributions, then leaving things be while you wait for gains over the long term.
The strategy seems to be working, as American 401(k) balances have climbed to record highs.
Why This Matters to You
For most American workers, a 401(k) or similar account is now their main vehicle for building a retirement nest egg. Retirement plans are increasingly being built to make good investing behavior the default, and Vanguard’s data suggests it’s working.
The Rise of the Hands-Off Investor
Vanguard found that only 5% of nonadvised participants—those not in a professionally managed option—made their own trades in 2025. That matches the 2023 and 2024 lows, and held even as the global stock market sold off sharply in the spring of 2025.
A key reason for the restraint, says Vanguard, is that more savers are using professionally managed options that automatically handle investment decisions on their behalf.
At the end of 2025, 69% of participants in Vanguard plans invested this way, which includes target-date funds, balanced funds, and managed advice services. The most popular investment option is a target-date fund, which was the sole holding for 61% of Vanguard 401(k) clients in 2025. That’s 45% higher than a decade ago.
Just 1% of savers holding a single target-date fund made any trades in 2025.
These funds blunt the temptation to act on emotion when headlines grow bigger and stock charts head down. They also shift automatically toward a more conservative mix as retirement approaches. They do tend to cost more than passive index funds, though, which can weigh on returns.
