Financial stress leaves less room for retirement saving

Americans are working, participating in retirement plans, and doing many of the things traditionally associated with retirement security. Yet Goldman Sachs Asset Management’s latest research finds growing signs of financial strain beneath the surface. The findings from that research were discussed in a recent webinar.

The research found more than 60% of survey respondents have taken on work outside their primary job, nearly 70% have delayed a major financial goal, and financial strain is showing up across income levels. At the same time, workers are looking for more personalized planning, professionally managed investment options and solutions that can make their savings work harder.

Housing, healthcare, education, childcare and day-to-day living expenses consume a larger percentage of household resources, leaving less capacity for retirement savings, said Chris Ceder, senior retirement strategist with Goldman Sachs.

“Housing costs are increasingly competing with retirement savings,” he said.
“Financial security does not uniformly improve with income. Many workers are supplementing the income from their primary job. The financial strain that we talk about is affecting the workplace, and how workers are deferring major financial milestones to cope with some of these challenges.”

The research found that two-thirds of Generation X, millennials and Generation Z expect to delay their retirement because of these competing financial priorities. When researchers asked respondents whether they believed they were on track with their retirement saving, 58% said they were – 10 percentage points less than those who said they believed they were on track last year.

Fewer respondents are increasing their savings, the research found. Nearly 40% said they increased their savings into 2026, down from 55% who said they increased savings into 2025.

Ceder said it is “pretty striking” that slightly more than half (57%) of Gen X respondents, who should be in their peak earning years, said they believe their jobs provide them with a level of financial security.

In addition, he said the research found 54% of respondents say that financial concerns affect their focus at work, 32% said that they have missed work due to financial challenges, and 34% said that they are likely to look for another job because of financial security. Nearly half of Gen Z respondents said they need another job to achieve financial security.

Workers are deferring milestones because of financial stress, he said, with 83% of Gen Z, 78% of millennials and 65% of Gen X deferring at least one of their goals, such as establishing emergency savings, paying off debt or saving for retirement.

Personalized planning and guaranteed support would go a long way in helping workers achieve financial security, Ceder said. About two-thirds of survey respondents said they have a financial plan and 83% said they would benefit from guaranteed support.

Saving isn’t enough

Saving for retirement is not enough. Making those assets work as hard as they possibly can and having enough growth exposure throughout the entire life cycle is critical for workers’ ability to achieve security, said Wyatt Lee, head of target date strategies at T. Rowe Price.

“In a world where the rule of thumb is to save 15% of your salary in a defined contribution marketplace, you're seeing individuals in their 20s saving mid-single digits and not hitting double digits until they're in their 60s,” he said.

“Now if you can put more growth in their portfolios early, if you can have a glide path that starts close to 100% for people in their 20s and allow them to compound that growth all the way up into retirement, our research has shown if you can add 50 basis points to a participant's return over their life cycle, that could add five years of retirement income spending over time.”

Individuals who are saving for retirement are underfunded, Lee said, so they should have their portfolio in growth assets for as long as possible.

Address financial stress first

Employees’ current financial stress must be addressed before they can work toward their retirement savings goals, said Jonathan Barber, head of compensation and benefits solutions at Goldman Sachs Ayco.

“The reason workers are not contributing to their retirement plan is not because of indifference,” he said. “It's because certain expenses will always come first.”

Barber suggested that employers can start to relieve workers’ financial stress by offering them financial wellness programs.

Retirement income: Guaranteed or balanced

Demand persists for retirement income solutions as workers confront longevity risk (the fear of outliving savings), a worry 59% of workers say they carry.

A majority of respondents (83%) said they wanted some guaranteed income as part of their income strategy. A blend of guaranteed income and flexible access was the most commonly selected preference among respondents: 51% want a mix of income and access to savings, while 32% want to optimize monthly income guaranteed for life, even if it means giving up direct control over savings and their ability to withdraw large lump sums. A minority, 16.7%, want to keep full control over savings, accepting that the guaranteed income will be lower.

"The path forward isn't just about saving more but about being strategic in making every dollar work harder," said Ceder. "Personalization is a powerful tool: savers with a personalized plan are more than twice as likely to feel on track."

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