Retirement accounts are supposed to be a safety net for the future. Increasingly, they’re becoming an emergency lifeline for the present. Payroll Integrations’ newly released 2025 Employee Financial Wellness Report paints a worrying picture: 38% of U.S. employees have already withdrawn from their retirement funds, and a third say they’ll do it again in the next 12 months.
The findings underscore a generational divide in financial security. Nearly half (46%) of Gen Z workers admitted dipping into their retirement accounts—often to cover debt rather than emergencies—compared with just 6% of Millennials and zero Boomers.
Why Retirement Feels Out of Reach
While 87% of employees contribute to a retirement plan, confidence in actually retiring on time is fading. More than half (59%) said they don’t feel fully prepared, citing three main barriers: they started saving too late (36%), rising living costs prevent consistent contributions (36%), and market volatility has eaten into their savings (30%).
“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—whether through enhanced retirement plan offerings or expanded financial education.”
This year’s research, conducted by market research firm Dynata, reflects responses from 250 full-time employees and HR leaders across all 50 states.
The Emergency Fund That Wasn’t
Among employees who withdrew from their accounts, 37% said they did so to cover urgent, unplanned expenses like car repairs or medical bills. But for Gen Z, debt repayment is a bigger driver: 42% pulled money specifically to pay off loans.
And the problem isn’t going away. One in three workers (32%) expect to make another withdrawal in the next year to deal with emergencies, while 18% plan to do so just to keep up with day-to-day costs. That hints at a workforce under ongoing financial strain, not just one-off shocks.
Millennials: Surprisingly Steady
Millennials, often stereotyped as financially stretched, actually come out looking the most retirement-ready in this report. Nearly half (47%) said they’re fully confident they’ll retire comfortably, and just 31% reported ever tapping their retirement funds—far below Gen Z.
Contribution habits also differ sharply by age. While most employees are setting aside between 6% and 15% of their salary, Gen X and Gen Z are more likely to undersave, with 20% and 37% respectively contributing 5% or less. Boomers, meanwhile, are making the most of their final working years, with just 6% contributing at those lower levels.
Why Employers Should Care
The report frames financial wellness as more than just a personal issue. For employers, retirement insecurity translates to delayed retirements, disengaged workers, and increased pressure on HR benefits. Financial wellness offerings—such as payroll-linked savings, debt support programs, and better retirement education—are fast becoming a competitive edge.
Payroll Integrations, a company specializing in benefit automation technology, is betting on this shift. By connecting payroll systems directly with retirement plan providers, the company aims to simplify saving and boost participation at scale.
The second part of Payroll Integrations’ report, expected later this year, will explore employer perspectives and strategies for supporting employee financial health.
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