A survey says that workers are saving less and dipping into retirement due to economic pressures.

Key Takeaways

• A recent survey found that most workers have begun saving for retirement. However, economic pressures are making it difficult to continue saving.
• Many workers have reduced their monthly contributions to their retirement savings, stopped saving for their retirement or taken money from accounts in order to meet financial goals or buy essentials.
• Many workers have been able make up for the loss of retirement accounts by shifting their financial priorities.

Due to the high cost of life and the fact that more than half of the workers are still recovering from the pandemic financially, many Americans have cut back on their contributions or withdrawn money from their retirement accounts in order to cover essentials.

According to a survey conducted by the Transamerica Center for Retirement Studies in March, more than eight out of ten employed workers save for retirement. The median household has also saved $82,000.

Many workers have found it difficult to continue saving due to economic pressures. 72% said they had taken steps to deal with the rising cost of living caused by inflation. 56% still haven’t recovered financially from the pandemic.

Some people stop saving for retirement due to economic pressures

“Today’s employees are caught between a rock, and a hard place.” They are traversing disruptions in the economy, a tenuous employment market, and the high cost of everyday living—while being expected to self-fund a greater portion of their retirement income compared with prior generations,” according to Catherine Collinson, president of TCRS.

These pressures have caused many workers not to save or to withdraw funds from their retirement account in different ways. Transamerica’s study shows that 37% had tapped into retirement funds. This could be through taking a retirement loan, or making an early withdrawal.

In a March survey, Principal, a financial firm, found that 28 percent of workers have taken money out of their retirement accounts or borrowed from them, often for essential expenses, such as a downpayment for a house, or to cover the loss of a job. This is more likely to happen in households that earn $200,000 or higher annually.

In addition, the Principal survey found 39% of respondents had reduced their monthly savings and 20% had stopped saving for retirement altogether.

Pausing or Withdrawing Funds Doesn't Always Harm Retirement Accounts

But not everyone who changes their financial priorities to put retirement at the bottom of their list will face long-term effects.

Principal’s survey revealed that 78% of those who stopped saving for retirement were able restart their savings later.