Americans say they need $1.2 million to retire. Many won't get close

• Key Insight: Here's why workplace retirement plan participants are failing to reach their savings targets.
• What's at Stake: Plan participants who must choose between immediate debt relief and long-term financial security.
• Forward Look: Prepare for the next generation of retirement plans to incorporate more guidance and specialized investment solutions.
  Source: Bullets generated by AI with editorial review

Americans think they'll need an average of $1.2 million to retire comfortably, yet many expect to retire with less than half that amount, according to a new national survey. 

Rising costs, credit card debt and competing expenses are making it difficult for workplace retirement plan participants to close the gap, the Schroders' 2026 U.S. Retirement Survey found. 

Just 30% of survey respondents believe they will reach the $1 million mark before retiring, while 51% expect to have less than $500,000 saved at that point, including 24% who anticipate having less than $250,000. 

"Rising costs are forcing tough tradeoffs, and saving for retirement is often the first thing that gets deprioritized," said Deb Boyden, head of U.S. defined contribution at Schroders. "As an industry, we can't look at retirement savings in isolation. Credit card debt, rising costs and emergency expenses are all part of the same equation. Plan sponsors who address these realities holistically, rather than focusing on retirement savings alone, are better positioned to move the needle on retirement readiness."

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Conducted by 8 Acre Perspective, Schroders' retirement survey polled 1,500 investors nationwide, ages 30 to 79, between March and April. 

Cost of living pressures

Running out of money in retirement is a growing concern for Americans, with 81% of plan participants saying they are at least slightly worried about it. Rising everyday expenses are adding to that anxiety, as 69% believe higher healthcare, utility, insurance and housing costs have put retirement out of reach for their generation.

Those financial pressures are also affecting savings habits: 55% say competing expenses prevent them from saving 10% of their paycheck for retirement, while 33% report having more credit card debt than retirement savings.

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"The data suggests that participants are making short-term financial decisions that could have long-term consequences, and emergency savings and debt management come up as two of those," Boyden said. "The more that we can do to avoid disrupting long-term savings, the better off individuals will be at retirement."

Americans continue to view their workplace retirement plans as essential, with 74% calling them their single most important retirement asset. But financial pressures are forcing some participants to make difficult choices: 27% have reduced contributions, and another 27% have taken loans from their plan. 

The most common reasons for taking loans from workplace retirement plans include paying down credit card or other debt (36%), covering unforeseen family or personal emergencies (31%) and keeping up with rising living costs (27%). 

Read more: How life expectancy expectations shape retirement saving habits

Boyden said plan participants facing competing financial demands should view reduced contributions as a temporary step rather than a long-term strategy, encouraging them to restart contributions and work back toward capturing the full employer match. She also highlighted catch-up contributions as an important tool for employees nearing retirement. 

The dangers of sitting on cash

While sitting on cash may feel safe in the short term, it can eventually become a source of risk for investors, Boyden said. That concern comes as many retirement savers remain uncertain about their investment allocations, with 24% of plan participants saying they don't know how their retirement assets are allocated. 

Among participants who know how their retirement assets are allocated, equities represent the largest share of holdings at 27%, but cash is close behind at 26%. Fixed income accounts for 17% of assets, while target date funds and private equity/credit each make up 12%. 

"For investors who are not planning to retire in the next five years, holding one-quarter of your savings in cash comes with a significant opportunity cost," Boyden said. "Concerns about market volatility and downturns are understandable given the current macro backdrop. To alleviate these concerns, innovative new investment solutions have been developed that can lessen the impact of market drawdowns and thereby provide participants some peace of mind."

Read more: A shift in retirement: Why more companies back guaranteed income 

For benefit leaders, Boyden said the report underscores an opportunity to help employees feel more confident about their retirement decisions.

"That's an important opportunity for plan sponsors," she said. "We hope that the next generation of retirement plans include more guidance, support, education and investment solutions that meet the needs of individuals where they're at."