U.S. Workers Cut 401(k) Contributions and Borrow More Amid Cost Pressures
A new analysis from payroll firm Dayforce finds that full-time U.S. workers reduced their average 401(k) contribution rate in 2025 to 8.9% of pay from 9.2% the year before, the first decline since the firm began tracking the metric, with one in four employees cutting what they put into retirement plans. The pullback is sharpest among workers earning $50,000 to $100,000, which experts say underscores how middle‑income households are sacrificing long‑term savings to cover today’s bills in what they describe as an affordability crisis. Nearly 20% of full‑time workers took loans from their 401(k)s last year — the highest share Dayforce has recorded — while separate Vanguard data show a record 6% of participants took hardship withdrawals in 2025, up from 5% in 2024. A December Allianz Life survey cited in the report found about half of Americans felt more financially stressed heading into 2026, with day‑to‑day expenses their biggest worry. Analysts warn the trend may worsen this year, pointing to projections that households will spend about $740 more on gasoline in 2026 due to Iran‑war‑driven oil prices, even as Gen Z stands out as the only generation that actually increased its average contribution rate, from 5.9% to 6.2%.
📌 Key Facts
- Average 401(k) contribution rate among full-time workers fell from 9.2% in 2024 to 8.9% in 2025, according to Dayforce.
- Roughly 25% of employees reduced annual retirement savings in employer plans in 2025, with the steepest drop among those earning $50,000–$100,000.
- About 20% of full-time workers borrowed from their 401(k)s in 2025, while Vanguard reports 6% of its participants took hardship withdrawals, a record share.
- Households are projected to spend an additional $740 on gasoline in 2026 because of Iran-war-related oil price increases.
- Gen Z workers were the only cohort to raise retirement contributions, from 5.9% to 6.2% of pay.
📊 Relevant Data
In 2024, 84.6% of White employees participated in their company 401(k) plan, compared to 68.2% for Black employees and 61.1% for Hispanic employees.
New 401(k) Analysis Reveals Racial and Gender Gaps Emerging — CPA Practice Advisor
In 2023, the official poverty rate for adults aged 65 and older was 7.2% for non-Hispanic White, 19.9% for Black alone, 17.3% for Hispanic (any race), and 11.0% for Asian alone.
Poverty in the United States: 2023 — U.S. Census Bureau
The median net worth of Black households is $44,100, compared to $284,310 for White households.
Racial Wealth Snapshot Series: Overview of Black American Economic Outlook Part 1 — National Community Reinvestment Coalition
Black households spend an average of 5.1% of their income on energy expenses, compared to lower percentages for other groups.
Across Income Levels, African American Families Have Higher Utility Bills Than Other Households — The Journal of Blacks in Higher Education
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