Americans pull back on retirement savings as costs climb

Americans are pulling back on retirement savings as everyday expenses climb, with nearly half of workers deprioritizing nest-egg contributions because housing, healthcare, car payments, and other costs come first. New 2026 surveys show many expect to retire with under $500,000 even as comfort targets top $1 million. That gap between yesterday’s nest-egg ideals and today’s budget squeeze is reshaping how households plan for later life.

Key Takeaways

• Nearly half of working adults say they are deprioritizing or unable to save for retirement because everyday bills come first, according to an NFP survey.
• Schroders’ 2026 survey puts the comfort “magic number” at $1.2 million, yet half of savers expect to retire with less than $500,000.
• One-third of workplace plan participants report more credit-card debt than retirement savings, and more than one-quarter have borrowed from their plans.
• Experts say chasing a single million-dollar target can overwhelm savers; smaller, attainable goals matter more than a round number.
• The Social Security trust fund is projected to be depleted by 2032 without policy action, adding pressure to private savings.

For years, a seven-figure balance stood in as cultural shorthand for a secure exit from work. Today’s data show that idea colliding with rent, insurance premiums, and grocery receipts. In our Nostalgia: Then & Now coverage, few money stories capture that shift as clearly as the latest wave of retirement surveys.

Why are Americans cutting retirement contributions right now?

Rising living costs are forcing hard tradeoffs. Bloomberg reporting carried by Yahoo Finance highlights three fresh surveys released in the same week, all pointing to the same squeeze.

An NFP survey found that 46% of working adults were “deprioritizing or unable” to save for retirement because housing, car payments, healthcare, and other everyday expenses take priority. About 72% of the 1,000 respondents said they are off track on their retirement savings goals. NFP is part of Aon Plc.

Schroders Plc’s separate survey of 1,500 respondents found that 27% reduced workplace retirement contributions or borrowed from their accounts to cover loans and emergency payments. Deb Boyden, head of U.S. defined contribution at Schroders, put it bluntly: rising costs force tough tradeoffs, and saving for retirement is often the first thing deprioritized.

Thrivent’s survey adds another layer. Almost two-thirds of non-retirees said they are focused on current personal finances rather than looking ahead to retirement planning. About 35% said they feel they are falling behind peers in retirement planning, largely because of high living costs.

What is the retirement “magic number,” and who can reach it?

Financial firms still poll workers on a comfort target. USA Today reports that Schroders’ survey, released July 15, found savers think they will need $1.2 million to retire in comfort. The poll reached 1,500 investors, including 615 workplace retirement savers.

Expectations tell a different story. Half of those surveyed said they expect to retire with less than $500,000. One quarter expect less than $250,000. Only 30% expect to reach the $1 million milestone. Boyden summarized the paradox: participants hold a million-dollar goal, but many are on a half-million-dollar trajectory.

A Northwestern Mutual survey published this year put its own magic number higher, at $1.46 million. Retirement experts caution that any arbitrary savings goal is more guidepost than hard target. Boyden said the message is less about that magic number and more about planning and working toward savings goals.

Reality on the ground is far from seven figures for most. The typical household in the 65–74 age range has about $200,000 in retirement accounts, according to the 2022 federal Survey of Consumer Finances cited by USA Today. Few planners argue every retiree needs $1 million. Many Americans retire with far less, and some live comfortably on Social Security income alone.

A more attainable rule of thumb, USA Today notes, is aiming to save 10 times annual income by age 67. For a typical household, that works out to a little over $800,000 based on a median household income of $83,730 in 2024—still ambitious, but closer to household math than a single round million.

How did the million-dollar retirement dream lose its grip?

A round $1 million figure has long served as popular shorthand for retirement security in surveys and headlines. That target still shapes how people answer polling questions. But Schroders’ and Northwestern Mutual’s higher comfort estimates—$1.2 million and $1.46 million—alongside the much smaller balances most households actually hold show how far targets and reality have drifted apart.

More than two-thirds of Schroders retirement savers said rising costs of healthcare, housing, insurance, and utilities “have put retirement out of reach for their generation.” More than half said they cannot set aside 10% of salary for retirement because of competing priorities. One-third said their credit-card debt exceeds their retirement savings. More than one-quarter said they had borrowed from retirement plans to pay down debts, cover emergencies, or keep up with the cost of living.

Savers are also parking a large share of assets in cash. Schroders found allocations of roughly 27% stocks, 26% cash, 17% bonds, 12% target-date funds, 12% private equity or credit, and 6% other—about 56% in stocks and bonds combined. Top reasons for cash: fear of stock-market losses (53%), diversification (44%), and waiting for the right time to buy (33%). Boyden warned of significant opportunity cost from sitting on the sidelines.

The long-term safety net looks less certain too. Bloomberg’s report notes the Social Security trust fund is projected to be depleted by 2032; without government action, that would mean significant cuts to promised benefits—another reason private retirement savings feel more urgent and harder to fund at once.

What should savers do when the old playbook no longer fits?

Stephen Jans, NFP’s national practice leader for wealth management, said the pressure of needing more than $1 million while falling behind in an affordability crisis can create overwhelm. His advice: do not freeze around a magic number. Identify the most important budget items, then set miniature goals that are attainable so people can collect small victories along the way.

That then-and-now lesson is the heart of the story. The old cultural target of a million-dollar nest egg still shapes expectations, but today’s surveys show households cutting retirement contributions, tapping accounts early, and expecting balances far below comfort targets. Planning that respects rent, debt, and healthcare—and builds from small, steady steps—matches 2026 reality better than chasing one round number alone.