Americans face a tough climb to seven-figure retirement comfort goal

When you’ve worked hard your whole life believing that there’s a pot of retirement gold at the end of the rainbow, the realization that may happen is a bitter pill.

But millions of Americans admit that they are unprepared for their retirement years and despite structured savings, they know they have less than they need for the comfortable lifestyle they dream of.

The Schroders 2025 US Retirement Survey reveals that, on average, Americans currently contributing to a workplace retirement plan believe they’ll need $1.28 million to retire comfortably, but 26% expect to have less than $250,000 saved by retirement, and nearly half anticipate less than $500,000.

Only 30% believe they’ll cross the $1 million threshold before they finally stop working and 81% express at least some concern about outliving their assets.

But while 69% say their employer-sponsored retirement plan is their most important retirement asset, many are leaving tools on the table, with just 20% taking advantage of auto-escalation features that gradually increase savings rates over time.

Even more concerning, nearly one in five (19%) have reduced their plan contributions including 61% that have done so within the last two years.

Making things worse is withdrawals from retirement accounts to cover other costs with around 17% of participants report borrowing from their plans to covering emergencies (29%), pay down debt (25%), and managing the rising cost of living (22%) cited as the main reasons.

“It’s difficult to focus on saving for retirement amid a seemingly endless supply of competing financial goals and obligations,” says 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.”

Adding to the challenge is how participants are investing.

For those who do know how their retirement assets are allocated (31% admit they don’t), a surprising 23% of their portfolios are sitting in cash, compared to 31% allocated to equities, 16% to fixed income, and 14% to target date funds.

Many cite safety concerns or uncertainty about investing as reasons for holding cash: 53% say they are afraid of losing too much money if the stock market goes down, while 47% want to diversify their investments, and 23% are not sure how best to invest their cash holdings.

“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,” Boyden warns.

Most participants (65%) say they worry about money too much, and more than half (56%) believe this stress could be harming their health. On average, they spend at least an hour a day worrying about finances, but 59% wish their employer offered more guidance on investing their retirement savings.