NEW YORK, July 16, 2026 – Americans now estimate they need $1.2 million to retire comfortably, according to a new survey from Schroders plc (LON:SDR). That figure represents a 6.3% decline from the $1.28 million target reported last year, but the drop does not signal easing retirement costs. Instead, it reflects growing financial pressure on households, as a record number of workers tap their workplace retirement plans for loans.
The survey reveals that 27% of respondents have taken loans from their 401(k) or similar plans, up sharply from 17% in 2025—a 59% increase. Meanwhile, 51% now expect to retire with less than $500,000, compared to 48% last year, and only 30% still believe they will reach $1 million, unchanged from 2025. The primary reasons cited are soaring expenses: 69% pointed to healthcare, utilities, insurance, and housing costs as barriers to retirement for their generation, while 55% said they cannot save 10% of their pay due to other obligations.
Contribution Rates and Plan Behavior
The survey highlights a troubling trend for retirement asset managers. Twenty-seven percent of participants cut their contribution rates, up from 19% in 2025, even though 74% consider their workplace plan their most important retirement asset. Lower contributions and increased borrowing reduce the flow of new cash into funds, potentially slowing asset growth for firms that rely on fees from assets under management. This dynamic can persist even during rising markets, as money is diverted away from long-term investments.
Key year-over-year changes from the Schroders survey include: the estimated comfort target fell 6.3% to $1.2 million; the share expecting less than $500,000 rose 3 percentage points to 51%; those cutting contribution rates jumped 8 points to 27%; and plan borrowing surged 10 points to 27%. Equity allocation dropped to 27% from 31%, while cash allocation increased to 26% from 23%.
Debt Repayment Driving Borrowing
More plan borrowers are using loans to pay down debt rather than for emergencies. Debt repayment was the top reason for 36% of borrowers, up from 25% in 2025, while those using loans for living costs rose to 27% from 22%. About one-third of respondents now have more credit-card debt than retirement savings. “Rising costs are forcing tough tradeoffs, and saving for retirement is often the first thing that gets deprioritized,” said Deb Boyden, head of U.S. defined contribution at Schroders.
Allocation shifts also weigh on market exposure. Among those who reported their investment breakdown, cash holdings nearly matched equities at 26% versus 27%, compared to 23% cash and 31% equities last year. Over half of cash holders said they avoid stocks due to fear of losses, while 33% are waiting for a better entry point. This cautious stance limits potential long-term gains.
Wealth Benchmarks and the 4% Rule
The $1.2 million target stands in contrast to actual retirement account balances. According to the Federal Reserve’s 2022 Survey of Consumer Finances, the top 10% of retirement accounts start at $463,000, and the top 5% at $923,400. Adjusted for inflation through June 2026, those thresholds rise to approximately $522,000 and $1.04 million, meaning even the top 5% falls 13% short of the Schroders target. Applying the 4% withdrawal rule, a top-10% balance yields just $20,900 in first-year income, less than half the $48,000 from $1.2 million.
Other surveys show even higher targets. Northwestern Mutual’s April poll found an average savings goal of $1.46 million, up from $1.26 million in 2025, with 48% worried about outliving savings. “The new ‘magic number’ reflects a convergence of factors, from persistent inflation and longer life expectancies to uncertainty about the future of Social Security,” said John Roberts, chief field officer at Northwestern Mutual.
Caveats and Implications
The Schroders survey polled different groups each year—602 in 2025 and 615 in 2026—rather than tracking the same individuals. It does not detail loan amounts, repayment rates, or changes in total account balances. For investors, the key issue is not whether $1 million or $1.2 million is the right number, but whether contributions and plan loans will sustain asset growth. If savings rates remain depressed, the lower target simply reflects a reality where many cannot save enough.
