Retirees More Likely to Stay in DC Plans Providing Flexible Withdrawal Features
Vanguard found that access to advice was among the features leading retirees to keep assets in employer-sponsored retirement plans.
Retiree behavior is heavily influenced by plan design, particularly the availability of flexible distribution options, according to The Vanguard Group’s “2026 How America Retires” report, published this week. The research suggests the industry’s next challenge is helping participants get comfortable turning savings into sustainable income in retirement.
Vanguard found that approximately 68% of plans for which it is the recordkeeper offered retirees the ability to set up installment payments to themselves from their accounts as of year-end 2025, compared with 59% in 2015, while 43% permitted flexible, non-scheduled partial withdrawals, compared with 16% in 2015. Both options enabled retirees to generate income while maintaining assets within the plan.
Even as plans have added features designed to support spending in retirement, Vanguard found many retirees may be taking either too much or too little investment risk. While nearly 6 in 10 retirees had a “fairly balanced” equity exposure of between 30% and 80% in their defined contribution accounts, one-fourth of retirees had more than 80% of assets in equities and 16% had less than 30% in equities, levels Vanguard labeled as potentially too aggressive or too conservative, respectively, for many retirees.
The report also found that personalized advice was an area of growth—46% of Vanguard-defined contribution plans offered advice services in 2025, and because larger plans were more likely to provide them, nearly 80% of participants had access to professional guidance. Vanguard argued that advice may become especially valuable during retirement, when participants must make individualized decisions about spending, withdrawals and portfolio management—including Social Security, healthcare, required minimum distributions, taxes, inflation, investment risk and longevity concerns.
Withdrawals and Advice
According to the report, and other recent research, retirees remained reluctant to tap their savings immediately. Among retirees aged 60 through 72 with balances of more than $100,000, 78% had taken no distributions at all from their accounts as of year-end 2025. Just 7% were receiving regular installment payments, while 15% had made ad hoc withdrawals.
Participants in plans offering installment payments and partial withdrawals were significantly more likely to keep their assets in their employer-sponsored plan than those without such features. Among retirees with balances of at least $100,000, retirees in plans enabling flexible distributions were more than 40%more likely to stay in the plan within three years of retirement than those in plans without that flexiblity.
More broadly, the Vanguard report stated that plan sponsors could support better retirement outcomes by offering flexible withdrawal options, along with personalized advice, retirement-income modeling tools and educational resources. The report noted that many retirees “prefer to manage retirement income on their own” and could benefit from tools like income calculators, paycheck modules and other financial guidance.
“Because there is no one-size-fits-all approach, plan sponsors should help retirees understand their options and next steps, from in-plan features and services to solutions outside the plan,” the report stated. “Meeting participants where they are is essential. By recognizing their goals and aspirations and offering support tailored to a range of needs and preferences, plan sponsors can help them pursue a comfortable and sustainable retirement.”