Retirement’s new magic number? Workers say they’ll need $1.2 million

The amount Americans believe they need to retire comfortably keeps climbing, and many workers say today’s financial pressures are making that goal increasingly difficult to reach.

According to Schroders’ 2026 U.S. Retirement Survey, participants in workplace retirement plans estimate they will need $1.2 million to retire comfortably. Fifty-one percent expect to have less than $500,000 saved by the time they retire, while only 30% believe they will accumulate at least $1 million.

The survey is the latest to gauge Americans’ retirement savings expectations. Earlier this year, a Northwestern Mutual survey found Americans estimated they would need $1.46 million to retire comfortably, up about $200,000 from the previous year.

Read more: Americans boost retirement savings target to $1.46M as anxiety over shortfalls intensifies

The gap between retirement goals and expected savings is fueling widespread anxiety. Schroders found that 81% of workplace plan participants are at least somewhat worried about running out of money during retirement. Many respondents pointed to rising everyday expenses as the biggest obstacle. Nearly seven in 10 said increasing healthcare, housing, insurance and utility costs have put retirement further out of reach for their generation. More than half said competing financial obligations prevent them from saving at least 10% of their paycheck for retirement.

Debt is also taking a toll on long-term savings. One-third of respondents reported having more credit card debt than retirement savings. Meanwhile, 27% said they have reduced contributions to their workplace retirement plan, with 70% of those cuts occurring within the past two years. Another 27% said they have borrowed from their retirement account, most commonly to pay down their credit card, cover unexpected emergencies or manage the rising cost of living.

“Rising costs are forcing tough tradeoffs, and saving for retirement is often the first thing that gets deprioritized,” Deb Boyden, head of U.S. defined contribution at Schroders, said in a statement. She added that employers are better positioned to improve retirement readiness when they address broader financial challenges alongside retirement savings.

Read more: BlackRock finds growing gap between retirement confidence and reality

The survey also found many investors taking a conservative approach with their retirement assets. Among participants who know how their accounts are invested, 26% of retirement assets are held in cash, nearly matching the 27% allocated to equities. Another 17% is invested in fixed income, while 12% is allocated to target-date funds and another 12% to private equity or private credit investments.

For many investors, that caution reflects concerns about market volatility. More than half of respondents who keep retirement savings in cash said they do so because they fear losing money if the stock market declines. At the same time, 58% said they wish their employer provided more guidance on investing their retirement plan assets, suggesting many workers are looking for additional support.

Retirement readiness is increasingly shaped by more than investment performance. For many workers, balancing debt, higher living costs and day-to-day expenses has become just as important as deciding how much to save for the future.