U.S. Workers Cut 401(k) Contributions and Borrow More Amid Cost Pressures
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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%.