Behind the numbers: How affordability challenges are affecting retirement savings in America

Retirement security does not erode overnight. It shifts gradually — one decreased contribution, one loan, with the effects compounding over time. The same can be true for the affordability challenges and financial strain that many families face.

The data in the new The State of Retirement Savings report from Dayforce suggests that both issues might have converged last year, leading to reduced retirement security for millions of workers.

In 2025, retirement savings rates edged downward to 8.9%, the first decline in three years. Participation rates ticked down slightly, while loan use from retirement accounts rose. More than one in four workers reduced their individual contributions. And the impacts were greatest among workers earning between $50,000 and $150,000 a year.

For employers, this is more than a benefits trend. It is a workforce signal.

When employees scale back long-term savings to manage short-term financial challenges, the effects extend beyond individual retirement accounts. Financial stress can influence engagement, productivity, and retention. Outcomes for employees and employers suffer as a result.

A closer look at the data

The State of Retirement Savings 2026 provides one of the most comprehensive views available of retirement participation, savings rates, contributions, and loan use across the entire full-time U.S. workforce over the past four years. It provides highly detailed insights by gender, race and ethnicity, age, and income. Notably, the analysis includes workers who do participate in an employer-sponsored retirement plan and those who don’t.

Overall, trends in retirement savings since 2022 have been decidedly mixed. While overall savings rates and annual contributions rose slightly, participation declined slightly. During that same time, loan use increased by over 20%. Critically, each of the four has worsened over the past year – a clear sign that recent progress has either stalled or reversed.

Retirement readiness is not an isolated issue. It is interconnected with the broader employee experience. Decreased retirement savings is a short-term problem that can have very real long-term consequences that impact overall well-being today.

When employees and their families face financial health challenges, it doesn’t stop at their doorstep. It can lead to increased absenteeism, higher turnover, and a reduced ability to be successful in their role and advance in their career.

The growing divide

While our analysis shows some progress since 2022, it also reveals a widening divide between those improving their retirement security and those falling farther behind.
 

• Income disparities are particularly stark. Participation, total contributions, and overall savings rates have declined for workers earning under $150,000 annually, with the greatest changes for middle-income earners. Employees in lower income bands save a fraction of what higher earners contribute and maintain savings rates well below recommended thresholds.

• Gender gaps persist. Men continue to save significantly more for retirement each year than women - $1,890 more from employer and employee contributions in 2025 alone. This means that women put aside just 72 cents per dollar that men do for retirement.

• Racial and ethnic disparities remain substantial. The total savings rate for white workers is significantly higher than for Black and Latino workers: 10.1% compared to 6% and 4.7%, respectively. Black and Latino plan participants are also nearly twice as likely as white participants to carry an active loan from a retirement account.

When segments of the workforce struggle to build retirement security, the impact often extends beyond individual outcomes to organizational performance. Financial stress can affect engagement and productivity, and employees increasingly view financial well-being offerings by their employers as a reflection of how much they’re valued.

A reason for optimism

There are encouraging signs in the research. Since 2022, Gen Z participation, savings rates, and contribution levels have improved faster than any other generation. While their overall savings rates remain lower than those of older cohorts, the upward momentum shows that behavior can change with greater access, communication, and investment. It’s clear evidence that employers can drive progress in retirement security across their broader workforce, particularly to employees in greatest need of help.

The path forward

While many of the findings are sobering, The State of Retirement Savings 2026 also demonstrates that progress is indeed possible. Organizations cannot control macroeconomic conditions. But they can control the investments they make in their people, the policies they put in place to help them, and their commitment to the health and well-being of their workforce. That can and should start with helping them make meaningful progress toward a secure retirement they’ve worked hard for and deserve.