$1.3 Million Needed to Retire Comfortably, Say Workplace Retirement Plan Participants
Americans currently participating in a workplace retirement plan believe they will need $1.28 million saved to retire comfortably, according to the Schroders 2025 U.S. Retirement Survey, released today.
Interestingly, that polarizing “magic number” Americans think they need to reach to retire comfortably in the new Schroder’s survey aligns very closely with what was reported earlier this year in Northwestern Mutual’s 2025 Planning & Progress Study—$1.26 million.
Despite this seven-figure-plus savings target, one-in-four workplace defined contribution plan participants in today’s Schroder’s survey (26%) expect to have less than $250,000 saved by retirement. Nearly half (48%) say they will have less than $500,000, and just 30% believe they will reach the $1 million milestone before retiring.
Not surprisingly, faced with this sizable savings shortfall, 81% of plan participants report that they are at least slightly concerned with outliving their assets in retirement.
Among those participating in a workplace retirement plan such as a 401(k), 403(B) or 457, 69% report the plan is their single most important retirement asset. Despite this significance, only 20% say they use their plan’s auto-escalation feature. More troubling, 19% say they have decreased the percentage of their income that they contribute to the plan, with 61% of them doing so in the past two years.
When it comes to borrowing money from their retirement savings plan, 17% report doing so. The most frequently cited reasons for taking loans their plan were to pay for unforeseen family or personal emergencies (29%); bring down credit card or other debt (25%); keep up with the increasing cost of living (22%); purchasing a home (15%); or paying for medical care (14%).
“It’s difficult to focus on saving for retirement amid a seemingly endless supply of competing financial goals and obligations,” said Deb Boyden, Head of US Defined Contribution at Schroders. “However, saving enough money for a comfortable retirement doesn’t happen by chance. If you don’t stay on track with saving in your workplace retirement plan, it’s unlikely you’ll be able to retire on your own terms.”
Asset allocation trends
Among those surveyed, 59% said they wish they received more guidance from their employer on how to invest their retirement plan assets. While nearly one-third of plan participants (31%) admit they don’t know how their retirement assets are allocated, among those that do know, allocations across all retirement investments (including workplace plans, IRAs, or other retirement accounts) suggest that loss aversion may be shaping their decision-making. A breakdown of how their retirement investments are allocated shows:
• Equities: 31%
• Cash: 23%
• Fixed income: 16%
• Target date funds: 14%
• Other: 16%
When asked about the reasons for allocating retirement savings to cash, the certainty of the asset class is the most frequently cited explanation:
• Safety—afraid of losing too much money if the stock market goes down (53%)
• To diversify my investments (47%)
• Not sure how best to invest cash holdings (23%)
“For most plan participants, saving for retirement is the quintessential long-term goal,” Boyden said. “If you’re five or more years away from retiring, a modest amount of cash could help you take advantage of tactical investment opportunities, but holding one-quarter of your portfolio in cash comes with a steep opportunity cost. Shifting these savings into investments that are designed to deliver better returns than cash while minimizing market downturns can help you accumulate wealth more efficiently and narrow any savings gaps.”
The Schroders 2025 US Retirement Survey was conducted by 8 Acre Perspective among 1,500 US investors nationwide ages 29-79, including 602 currently participating in a workplace retirement plan, in March and April 2025.
Check out the entire survey here: Schroders 2025 U.S. Retirement Survey.
SEE ALSO:
• ‘Magic Number’ for Retirement Drops to $1.26M for 2025
• States Where $1.5 Million Lasts Longest, Shortest in Retirement
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
