American workers are growing more concerned about their ability to retire comfortably, according to Schwab’s latest survey of 401(k) participants. Just 34% of respondents say they are “very likely” to meet their retirement savings goals—a notable drop from 43% in 2024. The shift in sentiment reflects persistent concerns over inflation and ongoing market volatility.
“401(k) investors continue to navigate uncertainty,” says Lee McAdoo, managing director at Schwab Retirement Plan Services. “Inflation and volatility remain top concerns, making it more challenging to maintain a long-term retirement focus.”
Despite these headwinds, most participants are holding steady with their savings habits. While many are adjusting spending to cope with economic pressures—40% are cutting back on purchases and 39% are opting for lower-cost alternatives—only 11% say they’ve reduced their 401(k) contributions.
“It’s a good sign that most participants are keeping their contributions consistent,” McAdoo adds. “The fact that people are preserving their retirement savings strategy despite financial pressures suggests a level of resilience and long-term planning.”
The number of participants tapping their retirement accounts has declined slightly. According to Schwab’s data, 21% of respondents reported either taking a loan or a hardship distribution from their 401(k), down from 26% in the previous year’s survey.
However, this self-reported trend may understate the reality. Just before Schwab’s findings were released, Vanguard published its own “How America Saves” report, based on retirement plan data from 4.8 million participants. Vanguard found that 4.8% of participants took hardship withdrawals in 2024, up from 3.6% in 2023. Additionally, 13% had outstanding loans—unchanged from the prior year.
Expectations around the role of 401(k)s in retirement are shifting as well. Schwab’s respondents now expect these accounts to provide about 45% of their retirement income, up from 43% last year. On average, participants believe they’ll need $1.6 million to retire comfortably, and they plan to retire at age 66.
Retirement expectations differ by generation. Baby boomers say they expect to retire at 69, while Gen Xers aim for 66. Millennials are targeting 65, and Gen Z is the most optimistic, with a projected retirement age of just 62.
Portfolio allocation is also changing in response to inflation and volatility. Nearly one in four participants—23%—say they’ve adjusted their 401(k) allocations in the past year. Among those, 79% have moved into more conservative investments.
For RIAs and plan advisors, these data points highlight both opportunity and challenge. Clients are clearly thinking about retirement and adapting to financial stressors. But growing anxiety around inflation and market risk could undermine long-term planning unless advisors help reframe the conversation and reinforce disciplined strategies. Balancing near-term uncertainty with long-term objectives remains a critical part of client guidance.
