Nearly half of U.S. workers now believe they’ll need a minimum of $1 million to retire comfortably—a steady rise compared to figures in 2024.
The finding comes from Betterment at Work’s latest Retirement Readiness Report, which shows that 48% of workers say they require a million dollars or more in retirement. This is up from 37% the year prior.
It’s the latest in a string of studies this year that have marked a one million dollar expectation for retirement. Schroders released a study in July that highlighted $1.28 million as the “magic number” to hit before retiring, while Northwestern Mutual followed closely at $1.26 million.
Yet, it’s unsure whether most will, or could, achieve this figure. Betterment’s research shows a clear disconnect between workers’ expectations of their financial future versus their current savings behaviors. While close to half expect needing upwards of a million, only 27% believe they’ll hit that goal.
Findings also report financial struggles among employees, as more grapple with short-term costs and inflation. Five in 10 have withdrawn from their retirement accounts for emergencies, while others continue to tackle managing student debt. Nine in 10 of workers in Betterment’s report say student loan payments have impacted their ability to adequately save for retirement.
Plan sponsors have an opportunity here to help participants build retirement security by providing meaningful benefits and financial guidance.
“It’s striking that even as financial anxiety reaches an all-time high, Americans’ belief in their long-term financial future hasn’t faltered,” said Sarah Levy, CEO of Betterment. “That optimism is encouraging, but employers play a critical role in turning it into real progress. Companies that invest in their employees’ financial wellbeing help transform confidence into concrete outcomes and create lasting value for their teams.”
One way employers can do this is by offering a higher 401(k) employer match, which topped out as the number one financial benefit that would entice employees to leave their company (55%). This was followed by providing an employer-sponsored emergency fund (44%), a 401(k)-matching program (43%), a 401(k) or other retirement plan (33%), a flexible spending account (FSA) or health savings account (HSA) (29%), and budgeting and savings tools (24%), among other offerings.
Eighteen percent of employees said they would consider leaving their employer for a company that provides student loan financial assistance or repaying programs, and another 18% would move on for a 401(k) match on student loan payments.
Small business employers have an opening to offer valuable benefits too, thanks to legislation that has eased administration and cost for smaller companies. While 79% of all employers currently offer a 401(k) plan, a smaller number (67%) of small businesses provide one for employees.
This could lead workers to transition to larger companies with access to financial and retirement plan benefits. Sixty-one percent of small business employees admitted in Betterment’s research that such features could entice them to move on.
Small business employees want to see more commitment from their employers when it comes to financial wellness, and they would be most likely to jump ship to an employer with better financial benefits,” stated Edward Gottfried, senior director of Product Management at Betterment at Work. “These insights spotlight a crucial opportunity for small businesses to fortify the loyalty and focus of their teams by elevating their financial wellness packages, starting with the benefits workers want most.”