Americans believe they need $1.2 million to retire comfortably, but most don’t expect to accumulate anywhere near that amount, according to a Schroders retirement survey released Wednesday.

The global investment manager surveyed 1,500 workplace retirement plan participants between March and April. While respondents estimated they would need $1.2 million in retirement savings, only 30% said they expect to reach the $1 million mark before retiring. More than half, 51%, expect to retire with less than $500,000, including 24% who believe they will have less than $250,000 saved.

Rising Costs, Debt Drive Retirement Gap

The survey found rising living costs, credit card debt and competing financial priorities are the biggest reasons many workers expect to fall short of their retirement goals. About 33% of respondents said they have more credit card debt than retirement savings, while 55% said they are unable to save at least 10% of their income because of competing expenses. Another 69% said rising costs have put retirement out of reach for their generation.

“Many investors are just struggling to turn their good intentions into long-term retirement readiness,” said Deb Boyden, head of U.S. defined contribution at Schroders.

The survey also found some workers are reducing retirement plan contributions or borrowing from their 401(k) accounts to cover debt, emergency expenses and higher living costs. A 401(k) is an employer-sponsored retirement savings plan that allows workers to invest for retirement with tax advantages.

Experts Say Habits Matter More Than a Target

Financial planner Douglas Boneparth, president and founder of Bone Fide Wealth and a member of CNBC’s Financial Advisor Council, said investors who feel behind should focus less on reaching a specific savings number and more on building consistent financial habits.

“It’s hard to save for a future that feels abstract when the present feels urgent,” Boneparth told CNBC. He said regularly saving, reducing high-interest debt and investing early can help narrow the retirement gap over time.

The survey also found 24% of participants do not know how their retirement savings are invested. Among those who do, 26% of retirement assets are held in cash, nearly matching the 27% allocated to equities, a mix experts say could limit long-term investment growth.

The findings add to broader signs that Americans are under growing financial pressure. Hardship withdrawals from 401(k) plans have continued to rise as more workers tap retirement savings to cover emergencies, while recent Federal Reserve survey data showed household financial anxiety reached its highest level since 2022. Separately, research has found more Americans are relying on credit cards and even dipping into long-term savings to pay for groceries as higher living costs continue to squeeze household budgets.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by a Benzinga editor.

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