Amid financial pressures, employees are lowering contributions to their retirement accounts, reducing savings, and borrowing from their funds.<\/p>\n
One in four full-time workers reduced their annual savings in their 401(k) or other types of employer-sponsored accounts in 2025, according to\u00a0new research from payroll firm Dayforce<\/a>. On average, workers cut their contribution rate to 8.9%, from 9.2% a year earlier \u2014 the first decline since Dayforce began tracking the measure three years ago.\u00a0<\/p>\n \u201cThe drop is a warning sign,\u201d said Jason Rahlan, global head of sustainability and impact at Dayforce in Brooklyn, N.Y. \u201cIt may seem small, but it tells a bigger story about where people actually are right now.\u00a0The costs of everyday life, such as housing, groceries, and gas, have\u00a0remained\u00a0elevated, and for many in the workforce, something\u00a0has to\u00a0give,\u201d he said. \u201cRetirement savings is where a lot of folks are turning to.\u201d<\/p>\n Indeed, employee financial confidence has been rocked by sustained\u00a0elevated inflation<\/a>,\u00a0high gas prices driven by the Iran war<\/a>, and economic uncertainty and job insecurity.\u00a0Employee financial confidence dropped to the lowest level in years<\/a>, according to recent data from insurance firm MetLife.\u00a0<\/p>\n As a result, many employees are concerned about meeting immediate financial needs rather than\u00a0focusing\u00a0their energy and savings on their post-work years, Rahlan explained.<\/p>\n Middle-income earners, those making between $50,000 and $150,000, are feeling the pressure the most, as they showed the steepest declines in retirement savings and participation, Dayforce found. \u201cThese aren\u2019t people necessarily living on the margins,\u201d Rahlan said. \u201cThey\u2019re working, many have access to a plan through their employer, and they\u2019re still pulling back.\u201d<\/p>\n Savings rates\u00a0aren\u2019t\u00a0the only hit retirement accounts are taking. The Dayforce data also revealed that more workers are dipping into their retirement funds. Loan use from retirement accounts rose for the third consecutive year and is now 22% higher than it was in 2022.\u00a0<\/p>\n \u201cNearly one in five plan participants has an active loan,\u201d Rahlan said. \u201cThat\u2019s not a blip,\u201d That\u2019s a pattern.\u201d\u00a0<\/p>\n Related Specialty Credential: Total Rewards<\/a><\/p>\n \u201cOur data clearly shows a forced trade-off,\u201d\u00a0Rahlan said.\u00a0\u201cIt\u2019s incredibly hard for millions of workers to adequately save for retirement when they\u2019re trying to manage the pressing needs of today.\u201d<\/p>\n