According to a new study, 38% of employees say they’ve tapped their retirement funds, and a third (33%) are planning to do so in the next year. While withdrawals stretched across all demographics, they were especially common among younger workers–nearly half (46%) of Gen Z workers report they had taken out funds. The two-part 2025 Employee Financial Wellness Report was commissioned by Payroll Integrations, a provider of automated benefits solutions.
Payroll Integrations’ Employee Financial Wellness Report explores the growing importance of financial wellness from the perspective of both employers and employees. Part 1 of the report reveals employees’ fading confidence in their financial futures as many continue to tap into their retirement savings to cover unexpected emergencies, rising everyday costs and debt. This year’s research also highlights retirement contribution trends and generational disparities in retirement readiness.
“It’s clear that many Americans are feeling the pinch of economic circumstances, and those pressures are fundamentally reshaping their retirement planning strategies,” said Doug Sabella, CEO of Payroll Integrations. “Many employees say they don’t feel prepared to retire on their own terms within their expected timeline, which is a strong signal to companies to increase support for employees, whether through enhanced retirement plan offerings or expanded financial education.
The new two-part report is based on research conducted by market research firm Dynata, on behalf of Payroll Integrations.
Among this year’s findings:
- Retirement withdrawals emphasize urgent financial needs. More employees are dipping into their retirement funds, not for discretionary spending, but to handle pressing financial emergencies. This year, 37% say they’ve withdrawn money to cover unexpected emergency expenses like car or home repairs. For the youngest working generation, unexpected emergency expenses rank behind debt repayment as the top reasons for tapping retirement savings: 42% of Gen Z (ages 18-27) employees specifically say they withdrew funds to pay off debt, compared to 6% of Millennials (ages 28-43), 17% of Gen X (ages 44-59) and none of Boomers (ages 60+). This isn’t a one-time occurrence, with one in three (32%) of workers planning to withdraw in the next year to cover unexpected expenses, while 18% say they will do so to manage rising day-to-day costs–signaling that these financial pressures aren’t easing anytime soon.
- Most employees are saving, but don’t feel confident about retirement. While 87% of workers contribute to a retirement plan, more than half (59%) say they are not completely confident they’ll be able to retire comfortably and on time. Many struggle with retirement readiness because they started saving later than they wanted (36%), rising costs of living are preventing consistent saving (36%) and market volatility has impacted their savings (30%). This retirement insecurity affects all working generations, not just older workers. Nearly half of Gen Z (47%) and Millennials (46%) say they started saving later than they had hoped, showing that they’re becoming more aware that starting earlier leads to better retirement security.
- Millennials are the most confident and careful with retirement funds. Millennials show the highest retirement readiness across the four generations, with 47% expressing that they’re completely confident that they’ll be able to retire comfortably. They also demonstrate strong financial management, as only 31% report having taken money out of their retirement funds.
- Retirement contribution levels vary widely across generations. While over 50% of employees contribute between 6% and 15% of their salary, reflecting strong overall participation, there are notable differences by age group. Gen X workers may be under-saving during their peak earning years, with 20% contributing 5% or less of their salary, while Gen Z faces significant affordability challenges, with 37% contributing the same. In contrast, only 9% of Millennials and 6% of Boomers contribute at that level. This variation highlights the diverse retirement readiness challenges faced by different generations.
Payroll Integrations’ 2025 Employee Financial Wellness Report is based on responses from 250 full-time adult employees and HR leaders across four age groups and all 50 states. Part 1 of the report can be found here.
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