Workers Cut Retirement Savings, Ask Employers for Help

Amid financial pressures, employees are lowering contributions to their retirement accounts, reducing savings, and borrowing from their funds.

One in four full-time workers reduced their annual savings in their 401(k) or other types of employer-sponsored accounts in 2025, according to new research from payroll firm Dayforce. On average, workers cut their contribution rate to 8.9%, from 9.2% a year earlier — the first decline since Dayforce began tracking the measure three years ago. 

“The drop is a warning sign,” said Jason Rahlan, global head of sustainability and impact at Dayforce in Brooklyn, N.Y. “It may seem small, but it tells a bigger story about where people actually are right now. The costs of everyday life, such as housing, groceries, and gas, have remained elevated, and for many in the workforce, something has to give,” he said. “Retirement savings is where a lot of folks are turning to.”

Indeed, employee financial confidence has been rocked by sustained elevated inflation, high gas prices driven by the Iran war, and economic uncertainty and job insecurity. Employee financial confidence dropped to the lowest level in years, according to recent data from insurance firm MetLife. 

As a result, many employees are concerned about meeting immediate financial needs rather than focusing their energy and savings on their post-work years, Rahlan explained.

Middle-income earners, those making between $50,000 and $150,000, are feeling the pressure the most, as they showed the steepest declines in retirement savings and participation, Dayforce found. “These aren’t people necessarily living on the margins,” Rahlan said. “They’re working, many have access to a plan through their employer, and they’re still pulling back.”

Savings rates aren’t the only hit retirement accounts are taking. The Dayforce data also revealed that more workers are dipping into their retirement funds. Loan use from retirement accounts rose for the third consecutive year and is now 22% higher than it was in 2022. 

“Nearly one in five plan participants has an active loan,” Rahlan said. “That’s not a blip,” That’s a pattern.” 

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“Our data clearly shows a forced trade-off,” Rahlan said. “It’s incredibly hard for millions of workers to adequately save for retirement when they’re trying to manage the pressing needs of today.”

The data from Dayforce comes amid findings that employees say they need more money saved for their retirement. Americans’ so-called magic number to retire comfortably in 2026 climbed to $1.46 million — a $200,000 jump from last year, according to recent figures from Northwestern Mutual. For those with $1 million or more in investable assets, the magic number is even higher, at $2.67 million. 

MetLife also recently reported that retirement insecurity is rising sharply: 51% of retirees fear running out of money in retirement, up from 30% less than a decade ago, while 58% of pre‑retirees feel the same. Pre‑retirees expect their savings to last only 15 years, down from 19 just four years ago, despite anticipating decades in retirement. 

Employer Impact and Help

What does all the data indicating the precarious state of retirement mean for employers?

“Employers need to see this for what it is,” Rahlan said. “It’s not just a benefits trend, but a signal about how their people are doing. When workers cut contributions or borrow against their retirement, that financial stress isn't just being experienced at home. It’s also showing up at work, and the negative effects can and do compound over time.”

MetLife recently found that in addition to higher pay, more employees are seeking assistance through a variety of health and financial benefits. The majority of employees (68%) expect their employer to play a role in supporting their financial well-being, MetLife found. 

Tools providing employees more immediate financial stability — such as providing financial literacy training and offering emergency savings accounts and other financial wellness benefits — can help, experts said. Employers can also look at ways that remove barriers to retirement savings entry, Rahlan said, which can include reducing waiting periods for new employees to participate in 401(k) plans, expanding access to part-time workers, and expanding employer contributions that aren’t tied to matching employee contributions.

“While employers can’t control the broader economic environment, they can control how they invest in their people through thoughtful policies and meaningful support,” Rahlan said. “That starts with helping employees make real progress toward the secure retirement they’ve worked hard for and deserve.”