Retirement Savings in 2026: 7 Trends HR Leaders Need to Know About

The retirement picture in 2026 tells two stories at once. On the one hand, 401(k) savings rates have hit record highs. On the other hand, hardship withdrawals are climbing and financial confidence across the workforce has fallen.

For compensation and benefits leaders, both of these stories matter. Retirement benefits are some of the most common benefits offered by employers, but despite their prevalence, many retirement benefits packages aren’t meeting the needs of today’s workforce. To support your people and strengthen your employer value proposition, your benefits strategy likely needs a refresh.

This guide breaks down seven key trends to give you a grounded view of what's really happening with retirement savings in 2026, including real data on what's changing and practical guidance on where to focus your strategy.

Trend 1: Savings rates are at a record high, but not for everyone

The headline numbers appear strong:

• 401(k) and 403(b) total savings rates hit peak levels in Q1 2026.
• The combined employee and employer average 401(k) savings rate reached 14.4% in the first quarter of 2026, a record high.
• The employee contribution average rate alone hit 9.6%, also an all-time high.

Based on the surface-level numbers, Americans have never saved more for retirement, but if you ask most workers in the US, savings are down. Nearly 40% of workers have reduced their 401(k) contributions due to concerns about inflation or recession. Across all savings accounts, 67% of workers say they’ve cut back—a four-point increase from the portion of workers who reduced their savings in 2024.

The record averages in savings are being driven by a small slice of the workforce. These “big savers” likely fall into one or more of the following categories:

• High earners: Income inequality in the US has never been greater, so while most Americans are reducing savings, high earners have an excess of money to save.
• Auto-escalated participants: Setting contributions to automatically increase each year supports greater savings—Q1 increases in 401(k) contributions are mostly attributed to auto-increases.
• Engaged savers: People who are educated on personal finance and prioritize their savings may also be represented in the “big saver” group, even if they aren’t top earners.

The gap between the haves and the have-nots of retirement savings starts even before contribution decisions can be made: Only 72% of full-time salaried employees are enrolled in retirement benefits, but company size is a big determiner of whether an employee is offered retirement benefits in the first place—less than half of companies (49%) with fewer than 50 employees offer retirement benefits, compared to 73% of mid-sized companies and 78% of enterprises.

Between income inequality, disparate financial education, and the random chance of their employer’s benefits package, a US worker’s retirement savings could be bigger than ever—or barely exist at all.

Benefits strategy insight

Tracking savings rates by their average can mask the gaps in your workforce. If you're not sure whether your plan’s contribution rates reflect genuine engagement or a handful of high earners pulling up the average, that’s worth investigating.

Auto-escalation, the feature that automatically increases an employee’s contribution rate over time, is the most effective lever for raising participation without requiring employees to do anything. Federal US law now requires most new 401(k) plans to include an auto-escalation option. If your plan doesn’t have it, that’s the place to start.

Trend 2: Employees are tapping retirement accounts to cover everyday costs

Employees aren’t waiting until retirement to spend their retirement savings. Nearly one in five workers (19.2%) had an outstanding 401(k) loan at the end of Q1 2026, up from 18.8% a year earlier. Hardship withdrawals—emergency 401(k) withdrawals that don’t need to be repaid—are also becoming more common: 6% of 401(k) participants made hardship withdrawals in 2025, up from 5% in 2024.

As financial pressures like inflation, gas prices, and wage stagnation continue to mount, 401(k)s are quickly turning into “break glass in case of emergency,” short-term savings stashes. Not only does this diminish long-term savings, but it also creates the additional financial burden of 401(k) loan interest rates and emergency withdrawal penalty fees.

Recent federal regulation does slightly lower the financial risks of early 401(k) withdrawals. The SECURE 2.0 Act, signed into law in 2022, protects some limited 401(k) withdrawals from penalties, depending on the reason for the withdrawal:

• Personal emergency expenses: The lesser of $1,000 or the amount that would keep the individual’s account balance at a minimum of $1,000 (if someone has $1,500 in their 401(k), they can only withdraw up to $500 penalty-free)
• Federally declared disaster (such as a hurricane): Up to $22,000
• Domestic abuse: The lesser of $10,000 or 50% of the individual’s account balance
• Terminal illness (of the account holder): All withdrawals must be penalty-free

That said, the growing need for employees to access their retirement savings early, even if they can avoid penalty fees, puts a greater strain on your workforce’s ability to accrue long-term savings.

Benefits strategy insight

401(k) loans and hardship withdrawals are symptoms of financial stress, which is never good for your workforce or your company. Financial problems lead to poor mental health, distraction, absenteeism, and lower engagement. After all, who can focus on a work project when they’re worried about paying a loved one’s medical bills?

Financial stress is also a retention risk: If employees are struggling to make ends meet, they’ll likely be looking for new opportunities with higher pay.

To support your org, prioritize financial wellness resources in your benefits offering. Even if you can’t afford to increase base pay, access to more savings accounts and personal finance services could make a big difference for your employees. These benefits could include:

• Emergency savings account
• College tuition savings account
• Interest-free on-demand pay
• Student loan repayment assistance
• Mortgage or rental assistance
• Childcare and eldercare financial assistance
• Personal finance courses or advising services

Trend 3: SECURE 2.0 provisions are hitting their stride in 2026

If you haven’t spent time recently reviewing your plan for SECURE 2.0 compliance, 2026 is the year to do it. The legislation has more than 90 provisions rolling out through 2033, and 2026 is a significant compliance year in that timeline.

Here's what's new or fully in force this year:

• Mandatory Roth catch-up contributions for high earners: Starting January 1, 2026, employees who are 50 or older and earned $150,000 or more in the prior year must direct all catch-up contributions to Roth accounts. Plans without a Roth option can no longer accept catch-up contributions from these employees at all.

• Plan amendment deadline: Most mandatory and optional provisions in SECURE 2.0 must be formally adopted via written plan amendment by December 31, 2026.

• Annual paper benefit statements: Defined contribution plans are now required to provide at least one paper pension benefit statement per year unless participants have explicitly opted into electronic-only delivery. Defined benefit plans must provide a paper pension benefit statement at least every three years.

Benefits strategy insight

SECURE 2.0 gives you several compliance action items for 2026. Leaders should audit plan documents, confirm payroll systems are configured for the Roth catch-up threshold, and proactively communicate catch-up contribution options to employees. These are high-value provisions that affect employees at a critical point in their savings journey, and most won't hear about them unless you tell them.

Stay ahead by reviewing future SECURE 2.0 rollout dates now. That way, you can create a multi-year adoption plan to already be in compliance with SECURE 2.0 provisions before deadlines go into effect.

Trend 4: Retirement savings behavior is splitting sharply along generational lines

The data suggests that an employee’s age has a big impact on how they feel about retirement and how they’re saving.

Retirement confidence is highest among younger workers: 57% of Gen Z workers and 61% of Millennials say they’re confident about retirement, compared to just 48% of Boomers and 45% of Gen X.

It’s possible that younger workers looked at their older peers’ struggle to save for retirement and felt motivated to start early. Gen Z’s IRA contributions grew 65% year-over-year in Q1 2026—the fastest growth of any generation. Millennials followed with a 31% year-over-year increase in IRA contributions.

Nearly one in five (19.6%) Gen Z employees increased their 401(k) contributions at the beginning of 2026, while only 15.5% of Baby Boomers made increases. Gen Z workers are also more likely to have a Roth 401(k) than any other age group. Meanwhile, Gen X employees appear to be struggling the most, with more than 1 in 4 (25.5%) having an outstanding 401(k) loan at the start of 2026.

As Gen Z ramps up their savings rate and Millennials steadily keep pace, Gen X and Baby Boomers are slowing down even as they approach (or pass) retirement age. Troublingly, this generational behavior difference also translates to who self-advocates. While nearly half of Millennials (49%) and Gen Z (46%) have asked their employers for better benefits, only 31% of Gen X and 24% of Baby Boomers have spoken up.

In other words, the employees who are closest to retirement and likely facing the most financial complexity are also the least likely to raise their hand and ask for more support.

Benefits strategy insight

To meet the needs of a multi-generational workforce, it’s a good idea to differentiate your benefits communication strategy by age cohort. Gen Z and Millennial workers are engaged by digital tools, are interested in more Roth account opinions, and benefit from auto-escalated contributions. Younger employees also likely need education and resources on how to start or enhance their savings strategy.

Baby Boomer and Gen X employees need education on catch-up contributions and retirement income planning. Gen X employees are also likely to need resources for recovering their retirement savings after a financial emergency, given the large portion of workers in this age group with outstanding 401(k) loans.

Having a two-pronged communication plan—early-career savings resources and pre-retirement support—will help you reach your entire workforce.

Trend 5: Employees want financial wellness support, but many aren't getting it

As the wealth gap grows and the cost of living rises, financial wellness programs have moved from a nice-to-have to a genuine workforce need.

Employees recognize that to achieve financial stability and reach their savings goals, they need more than a 401(k) match. A rising portion of workers want access to planning tools and education: 36% of workers want retirement education and planning support and one in three (33%) want help with building better financial habits.

Today’s workers know they need more support, with 83% saying they want their company to offer more benefits. And many aren’t afraid to speak up: 37% of employees have already asked leaders to add or improve benefits offerings.

Tellingly, an employer’s ability to offer such benefits is another case of the haves and the have-nots. More than half (54%) of large companies offer financial wellness benefits, compared to just 32% of small companies. This disparity trickles down to the employee experience: Most employees (57%) at large companies feel financially well, while only 41% of employees at small companies feel the same.

The disparity in benefits offerings comes down to the money. While small businesses report feeling responsible for their employees’ financial wellbeing, a majority (51%) prioritize cost when it comes to choosing a benefits provider. Thus, an employee getting the financial wellness support they need depends on whether their employer can afford it.

Benefits strategy insight

Before adding new financial wellness programs, audit what you already have and how well it’s being communicated. Awareness is the lowest-cost intervention. You may already have some great tools available, but if employees don’t know a resource exists, it doesn't help them. Consider embedding financial wellness resources into enrollment and onboarding workflows so employees encounter them at the moments when they’re most receptive, rather than buried in an intranet no one visits.

It may also be worth initiating an additional awareness campaign specifically for leadership. Some leaders may see financial wellness tools as just an extra perk and not a core benefit. You can help leadership understand the value of investing in these benefits by presenting data on how financial wellness supports engagement, retention, and your employer brand.

Trend 6: HSAs are emerging as a retirement savings strategy

Healthcare is becoming one of the biggest cost concerns for retirement. A 65-year-old needs an estimated average of $172,500 to cover healthcare expenses in retirement, a figure that has more than doubled in the past two decades.

Enter the Health Savings Account (HSA), a favorite savings tool among retirement strategists. Established in 2004, HSAs were created to alleviate some of the financial burden of healthcare, giving individuals with eligible health plans a new option for pre-tax health savings. Unlike a Flexible Savings Account (FSA), where you forfeit any balance you don’t withdraw within the plan year, an HSA allows funds to roll over indefinitely—in other words, that pre-tax money is yours forever.

An HSA has a triple-tax advantage: contributions are pre-tax, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. 2026 contribution limits are $4,400 for individuals and $8,750 for families, with an additional $1,000 catch-up for those 55 and older.

Many employees use their HSA as a regular health spending account—contributing just enough to cover expected medical costs during the year and drawing it down as they go. But the IRS imposes no time limit on reimbursing qualified medical expenses from an HSA. That means employees can pay out-of-pocket today, let HSA funds grow invested for years or decades, and make tax-free withdrawals later using saved receipts (thus, the tax-free withdrawal, a “reimbursement” for a medical expense that was paid years earlier, can be used however you want). If you don’t save medical expense receipts, you can also simply use your HSA funds to cover actual healthcare costs during retirement.

For people who can afford to cover near-term healthcare costs from other funds, the HSA is a powerful long-term retirement savings vehicle. And the workforce is catching on: One in four employees contribute to an HSA as a way to prepare for healthcare costs in retirement.

Benefits strategy insight

If your organization offers an HSA-eligible high-deductible health plan, make sure to provide employee education about it. Most people don’t have a background in finance and won’t be aware of this retirement savings strategy on their own. When creating open enrollment materials, consider explicitly positioning the HSA alongside the 401(k) and other retirement plans, so employees can see the connection between an HSA and retirement savings.

Trend 7: Older workers are delaying retirement

Retirement at 65 is increasingly becoming out of reach for the average worker. Employment of workers 65 and older has grown 117% over the past 20 years. In the US today, nearly one in five (19.5%) people over the age of 65 are participating in the workforce.

Many of these older employees aren’t staying in their jobs out of enthusiasm for the work. Rather, it’s a financial necessity: 41% of workers 50 and older who are working or looking for work say they’re doing so to afford everyday living costs. In other words, many Baby Boomers and older Gen X employees aren’t staying in the workforce to build up extra retirement savings—they’re just trying to pay the bills today.

For a majority of workers, full retirement is no longer the plan. Over half (55%) of workers expect to work part-time in their retirement. This sentiment is highest among older generations: 60% of Baby Boomers plan to work part-time in retirement, and so do 58% of Gen X workers. Troublingly, some employees have given up on retirement altogether, with one in five workers of any age saying that they don’t need to save for retirement because they expect to work full-time their entire lives.

Benefits strategy insight

Older employees who delay retirement should be treated as a distinct demographic within your workforce. Be proactive in communication about catch-up contributions to savings accounts and educate employees on whether their savings plans allow delayed RMDs (required minimum distributions).

Consider introducing a phased retirement program, where employees over 65 can transition to a part-time role. This enables older workers to continue contributing to retirement savings and earning some income without having to commit to full-time hours. Note that SECURE 2.0 requires part-time employees to be allowed to contribute to 401(k) savings if they’re at least 21 and work a minimum of 500 hours a year for two consecutive years.

As you review your benefits offerings, it’s worth thinking about the unique needs of an older workforce. Check whether your employee wellness program addresses common health needs for older adults, such as cognitive agility and physical mobility, as well as mental health concerns like loneliness and depression.

Eldercare is another area to think about. Eldercare benefits can come in the form of stipends for home nurses or adult day programs. We often think of eldercare as a need for middle-aged workers caring for their aging parents, but as people stay in the workforce for longer, your employees will likely begin taking on caretaker roles for their partners, as well. One in four people with a spouse or partner over 65 have caregiving responsibilities. That portion goes up to 32% for people with a partner over 75.

What a “typical” retirement looks like is changing. Keeping your benefits strategy up-to-date so it reflects your workforce’s actual circumstances will ensure that everyone has the opportunity to thrive in this new phase of their career.