Vanguard's 2023 "How America Saves" report found Americans were saving more for retirement. However, it also revealed that more of them had to take hardship withdrawals from their retirement savings too. Yahoo Finance columnist Kerry Hannon breaks down the report and what it's showing about the retirement landscape.

Video Transcript

SEANA SMITH: Americans are saving for retirement at record rates, according to a recent report from Vanguard. 39% of workers increase the percentage of their paycheck that they said, that they set aside for their 401(k) account last year. Yahoo Finance's Kerry Hannon is following this story for us.

Kerry, finally, some good news on the retirement front in terms of how much people are saving.

KERRY HANNON: I know. I absolutely love it. I mean this is, they're looking back at last year and it was a pretty rough year, wasn't it? I mean, the market volatility. You know, we did see account balances droop.

But you know what? The savers, investors in these 401(k) plans that Vanguard manages stayed the course. And, in fact, the great news is they upped the ante. You know, 8 in 10 are now enrolled in their plan. And that is just gradually been increasing since 2013, which is great news.

And, as you mentioned, 4 in 10 increased how much they set aside. I mean, is really according to Vanguard, these are record highs of the percentage of your paycheck people are putting aside in these retirement accounts. And that's super positive. And I think that when you combine it-- I think the average is like 7.4% when you combine it what the employer matches.

And this is the cool thing, 2/3, I think they said, 2/3 of their fund, companies have 2/3 of the participants are putting enough away to get that match. That is awesome because that is free money, right? That is just a great perk. And so when you put that together, it's like 11.3%. And most financial planners suggest that you set aside anywhere from 12% to 15% of your income for retirement.