Almost half of America’s youngest workers are raiding their retirement accounts just to get by, a new report has found.
Payroll Integrations’ 2025 Employee Financial Wellness Report found that 38 percent of employees overall have withdrawn money from their retirement accounts at some point. Among Gen Z workers, that figure jumps to 46 percent, compared to 31 percent of Millennials,
These withdrawals are often not for discretionary purchases, but to cover more urgent, unavoidable needs. More than a third of employees who accessed their retirement savings this year—37 percent—used the money for emergency expenses such as major home or car repairs. This was highest among Gen X, with 56 percent saying they had withdrawn retirement cash to pay for an unexpected expense.
For Gen Z specifically, the top driver of withdrawals was debt: 42 percent of those who tapped their retirement funds said they used the money to pay down what they owed. Only 6 percent of Millennials, 17 percent of Gen X, and no Baby Boomers reported debt repayment as their reason for early withdrawals.
“Gen Zers are in the early years of their careers—many having recently graduated college and still grappling with student loans and the costs of living on their own for the first time,” Doug Sabella, CEO of Payroll Integrations, told Newsweek. “While the intent is there, long-term savings often take a backseat to more immediate debt, leading many to withdraw funds early.”
The report also found that 85 percent of Gen Z workers are contributing to a retirement plan, a sure sign the generation understands the importance of saving even as they struggle to balance competing financial pressures. But one in three employees overall said they plan to make a withdrawal in the coming year, most often to cover unexpected expenses or day-to-day costs—while 18 percent expect to use retirement money for everyday costs.
Stock image of a young woman looking at a receipt.
Stock image of a young woman looking at a receipt.
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The report also found that the majority of Gen Z workers—68 percent—anticipate they won’t be able to retire comfortably. “While the majority are contributing to retirement plans, their high withdrawal rate indicates that they don’t have the financial foundation to sustain those contributions,” Sabella said.
Reasons To Be Cheerful
Still, there is reason for optimism. “The good news is that Gen Zers have many years to catch up, especially as they progress in their career and earn more,” Sabella said.
“These early withdrawals won’t necessarily derail their long-term retirement goals, but it’s critical that they build a strong financial foundation before committing any more to retirement contributions. Without that stability, they risk falling into a cycle of contributing and withdrawing, which could severely impact their savings later in life.”
The broader concern is whether these withdrawals reflect a temporary response to current economic pressures or a lasting shift in how Americans use their retirement savings.
“Because many workers are struggling to save for both retirement and emergencies, retirement accounts are increasingly being viewed as emergency funds rather than untouchable nest eggs,” Sabella said.
“While today’s early withdrawals are largely a response to current financial strain, this may evolve into a broader shift, with more people feeling comfortable dipping into their retirement savings. With 87 percent of employees contributing to a retirement plan, it’s clear that these long-term savings are still a priority across all generations—but we may see a growing acceptance of withdrawals as a financial safety net.”