Are password managers safe? How vaults work and what breaches show

A password manager puts every password you own in one place, which sounds like the worst possible idea until you look at the alternative: reusing a few passwords everywhere, so one leak opens all your accounts. The UK's National Cyber Security Centre recommends them, and NIST, the US standards agency, requires government login systems to allow them. This guide explains how the vault is actually protected, what one company's own incident notices said was taken when its backups were stolen, and how to choose and set one up so a breach would not hurt you.

Are password managers safe?

Yes. A reputable password manager is safer than reusing passwords or keeping them in a file, and both the UK's National Cyber Security Centre and the US standards agency NIST support their use. The condition is design: your vault should be encrypted on your own device with a key made from your primary password, so the company stores only scrambled data.

That means two things decide whether your vault survives the worst case, where an attacker copies it from the company's servers. One is how slow the manager makes each password guess. The other is how strong your primary password is. The company controls the first. You control the second.

How password manager encryption works

A well designed password manager that syncs between devices follows this pattern, which is also how LastPass described its own design in the incident notices quoted below:

You pick one primary password (some apps call it a master password). The company does not store it.
Your device turns that password into an encryption key using a deliberately slow function, so every guess costs an attacker time and computing power.
Your device encrypts the vault with that key before anything is uploaded. The server keeps the encrypted copy and syncs it to your other devices.
To unlock, your device rebuilds the key from the password you type and decrypts the vault locally.

The slow step is the important one. OWASP, the open web security project, explains in its password storage guidance that fast hashing such as plain SHA-256 is unsuitable for passwords "because they allow attackers to perform large numbers of guesses quickly," and recommends slow algorithms such as Argon2id, scrypt, bcrypt or PBKDF2. For PBKDF2 with SHA-256, its current figure is 600,000 iterations. OWASP writes that advice for websites storing login passwords, but the reasoning is the same for a vault key: the more work per guess, the longer a stolen copy holds out.

Not everything in a vault is always encrypted. Some managers have left items such as website addresses readable, which tells an attacker which sites you use even if your passwords stay locked. A manager's security documentation should say which fields it encrypts.

Can password managers be hacked? What one breach showed

The best evidence is a company describing its own incident. In 2022, LastPass published a series of notices about a breach. Here is what those notices said, in the company's words where it matters.

The first incident. In August 2022, the company said an attacker had used a compromised developer account to take "portions of source code and some proprietary LastPass technical information" from its development environment. It said no customer data or vaults were in that environment.

The second incident. On December 22, 2022, the company said the attacker had used information from the first incident to reach a cloud storage service holding backups. The attacker "was also able to copy a backup of customer vault data." The notice said that backup held "both unencrypted data, such as website URLs, as well as fully-encrypted sensitive fields such as website usernames and passwords, secure notes, and form-filled data." Those fields were protected with "256-bit AES encryption" and a key "derived from each user's master password," and the company said encryption and decryption happen "only on the local LastPass client." Separately, the attacker copied account details: names, billing addresses, email addresses, phone numbers and IP addresses.

What the company said the risk was. The same notice said the attacker "may attempt to use brute force to guess your master password and decrypt the copies of vault data they took," and warned that the stolen contact details could be used for phishing. It said it had required a 12-character minimum for master passwords since 2018 and used 100,100 PBKDF2 iterations by default. Customers whose master passwords did not meet those defaults were told to "consider minimizing risk by changing passwords of websites you have stored."

The full picture. A March 1, 2023 update said the attacker targeted a senior DevOps engineer through "vulnerable third-party software," delivered malware, and reached backups containing "backups of all customer vault data." It said all sensitive vault data was encrypted except URLs, file paths to installed software and certain uses of email addresses. A backup of the multi-factor authentication database, including authenticator seeds and backup phone numbers, was also accessed.

What this shows for anyone choosing a manager:

The company can be breached even when the app itself has no bug. The update said neither incident was caused by a product defect. Assume your encrypted vault could one day be copied.
After that, your primary password is what is left. An attacker with a copy can guess offline, with no lockout and no rate limit. A long, unique primary password and strong key derivation settings decide whether that takes forever or not.
Unencrypted fields still leak something. Website addresses tell an attacker where you have accounts, which is useful for targeted phishing.

Is it safe to save passwords in your browser?

On your own devices, yes. The NCSC's password manager guidance says saving passwords in the browser is "safe for you to do this on your own devices" and is the easiest option if you use the same browser everywhere. Two cautions from the same page: never save passwords on a shared public computer, such as at a library or college, and remember that browser-saved passwords "are only as secure as your devices and accounts," so keep automatic updates on.

The NCSC notes the main reason to pick a separate app instead: it can sync passwords "even when you have a mix of different browsers and devices."

How to choose a password manager

The NCSC's own answer is that the best one is the one that "best meets your needs, and which you find easiest to use." A manager you actually use beats a stronger one you abandon. Within that, check:

Vault encryption on your device. The company's security documentation should state that the vault is encrypted and decrypted on your device with a key derived from your primary password, and that the company does not store that password.
Which fields are encrypted. Look for a clear statement covering usernames, passwords, notes and website addresses.
Key derivation. The documentation should name the function (such as Argon2id or PBKDF2) and its settings, and old accounts should be upgraded when defaults change.
Two-step verification on the account. The NCSC says this means "even if a cyber criminal knows the primary password, they still won't be able to access your account."
Devices and browsers. Make sure it works on every phone, computer and browser you use.
A public incident history. Look for how the company has reported past security problems, if any, and how quickly.
Recovery options. The NCSC mentions password hints and emergency access through trusted contacts. Know which recovery methods exist before you need one, since each is also a way in.

How to set up a password manager safely

Create a long primary password you have never used anywhere. NIST's current guidance, SP 800-63B-4, sets a 15-character minimum for passwords used on their own. A string of random words is easier to remember at that length. Our guide on how to create a strong password walks through it.
Turn on two-step verification for the password manager account straight away. See is two-factor authentication safe for the trade-offs.
Write the primary password down once and keep it somewhere physically safe at home. The NCSC says writing passwords down can be done safely "because an attacker would need physical access."
Import or add your accounts, starting with email. Your email inbox resets every other password, so give it a new, generated password first, then banking, then everything else.
Let the manager generate new passwords as you log in to each site. NIST notes that password managers "increase the likelihood that subscribers will choose stronger passwords, particularly if the password managers include password generators."
Use autofill instead of typing. The NCSC points out that autofill only fills in on the correct website, which helps you notice a phishing page.
Act on breach warnings. Many managers flag reused or leaked passwords. You can also check whether your email has been in a data breach.
Keep every device updated and locked. Your vault is decrypted on your device, so the device needs the same care as the vault. The NCSC tells browser users not to switch off automatic security updates, and the same applies to any device you unlock your vault on.

What to do if your password manager is breached

Use the company's own notice as the guide, and if it is vague, assume the worst case.

Read the official notice from the company's own website and note what it says was taken, encrypted or not.
Change your primary password, and if the company recommends it, upgrade your key derivation settings.
If your old primary password was short, reused, or older than the company's current minimum, change the passwords stored in the vault, starting with email, banking and anything holding money.
Reset two-step verification codes if the notice says authenticator data was involved.
Expect phishing. The 2022 notice warned that the company "will never call, email, or text you and ask you to click on a link to verify your personal information." Treat any message like that as a scam.
Move secrets you would never want cracked, such as recovery phrases, off any vault protected by a weak or old primary password.

The same test applies to your inbox

The question that decides whether a vault survives a breach is simple: is it locked with a key made from your password, on your device, so the company only holds scrambled data? Ask the same of your email, because your inbox holds every password reset link you will ever receive. Secria Mail uses zero-access storage locked with a key made from your password, on your device, and protects mail with hybrid post-quantum encryption (ML-KEM-1024 with X25519) on every plan, the free one included. It is free with no phone number and no card, and has no ads. You can create an account here.

Frequently asked questions

What happens if a password manager gets hacked?

If the vault is encrypted on your device, attackers get an encrypted copy and must guess your primary password offline to read it. A long, unique primary password and slow key derivation make that impractical. Any unencrypted fields, such as website addresses in some products, and account details like your email address can still be exposed.

Can a password manager company see my passwords?

With the design described above, no: the vault is encrypted on your device and the company does not store your primary password. Check the company's security documentation to confirm that is how its product works, including which fields are encrypted.

Is it safer to write passwords down?

Writing them in a notebook kept at home is reasonable for some people, and the NCSC says it can be done safely because an attacker would need physical access. It does not help on the go and makes long, unique passwords harder to use. A password manager is the easier way to give every account its own password.

Is a free password manager safe?

It can be. The NCSC lists browser password managers, which are free, as safe on your own devices. For any free app, apply the same checks as a paid one: encryption on your device, which fields are encrypted, two-step verification, and the company's incident history.

Should I still use passkeys if I have a password manager?

They are worth trying where a site offers them. Our guide on what a passkey is explains how they work.

A password manager is safe when the company could lose your vault and still not be able to read it. Pick one built that way, give it a primary password nobody could guess, and turn on two-step verification before you add anything else.