Americans are cutting back on their retirement savings. That’s a “warning sign,” experts say.

Americans are pulling back to prepare for retirement, and workers cut their annual contributions to their 401(k) accounts last year, according to new research from payroll firm Dayforce.

Full-time workers cut their contribution rate by 2025 to 8.9%, from 9.2% a year earlier, while one in four workers reduced their annual savings in a 401(k) or other types of employer-sponsored accounts. The dip — the first drop since Dayforce began tracking the measure three years ago — was sharper among workers with annual incomes of $50,000 to $100,000.

That drop could point to financial pressures on middle-class Americans, with some retirement contributions pushing up their paychecks, Jason Rahlan, global head of operations and impact at Dayforce, told CBS News. The survey also found that nearly 20% of full-time workers have created their own 401(k) loan plans in the past year — the highest share since the company began tracking the data.

“This should be a warning sign,” Rahlan told CBS News. “It may be a sign of financial stress,” he said, pointing out that workers are putting aside their retirement goals to focus on urgent financial matters.

Nearly half of Americans said they were more financially stressed in 2026 than a year earlier, according to a December survey from insurance firm Allianz Life. Covering daily expenses was a major source of concern, the survey found.

“Seeing Chaos”

Although the reduction in retirement contributions is relatively small, it could result in “a real long-term impact” if the trend continues, given the importance of saving money throughout your career, said Matt Bahl, vice president at the Financial Health Network, a non-profit organization focused on financial issues that contributed to the report.

“When you’re struggling every day, it’s hard to focus on your long-term goals,” Bahl said. “We’re really seeing a decline in middle-income earners — it speaks to the problem of affordability.”

The decline in retirement savings is likely to continue this year, Rahlan and Bahl said, pointing to projections that show households will spend more. an additional $740 in gasoline this year because of jglobal oil prices because of the Iran war.

Some research funding supports Dayforce’s findings. For example, in March, pension plan giant Vanguard found that a share record Americans poured into their retirement savings accounts last year to cover emergency expenses. In 2025, 6% of enrollees in 401(k) plans managed by Vanguard experienced so-called financial problems in their accounts, up from 5% in 2024.

Loans from retirement accounts are slightly different from hard withdrawals, as the former do not include taxes and penalties. But the loans must be paid back into the retirement account. On the other hand, hardship removal – which can be done for emergency situations such as medical treatment or to avoid imprisonment or deportation – does not need to be paid.

Generational differences

Total pension plan contributions and savings rates dropped for most workers last year regardless of age, including baby boomers, Gen Xers and millennials, Dayforce found.

However, one generation has won this trend: Gen Z workers, born between 1995 and 2009, the firm’s analysis found. While their retirement plan savings rate is somewhat lower than that of older workers, they were the only generation to boost their contributions, with the average Gen Z worker increasing their contribution rate to 6.2% last year from 5.9% in 2024, Dayforce found.

“They’ve seen the biggest gains of any generation in terms of retention and attrition,” Rahlan said.

Younger workers may be learning from the mistakes of older generations, especially those who were the first to enter the workforce as the retirement system moved from pensions to 401(k) plans, where the onus is on employees to make contributions and financial decisions, Bahl said.

“They learned from the good and bad behavior” of older Americans, he said.