Debt is crashing into America’s $1.2 million retirement dream

Americans are putting a big number on a comfortable retirement: $1.2 million. The problem, according to a Schroders survey, is that many savers are carrying debt loads that make that target look far away.

Schroders, an asset-management firm, found that one-third of people saving for retirement said their credit-card debt is larger than their retirement savings. Only 30% said they expect to reach $1 million before they stop working.

More than half of respondents, 51%, said they expect to retire with less than $500,000 saved. That includes 24% who said they expect to have under $250,000, according to Schroders.

Deb Boyden, head of U.S. defined contributions at Schroders, told MarketWatch the results showed a gap between what people hope to have and what they appear likely to accumulate. She described it as a retirement-readiness problem.

Debt is eating into savings

The pressure is not coming from one place. Schroders pointed to higher everyday costs, credit-card balances and other demands on household money, including college bills and emergency savings.

NerdWallet reported that the average U.S. household with revolving credit-card debt owed $10,895 as of March 2026. That kind of balance can make retirement contributions easier to cut when groceries, gas, housing and healthcare costs rise.

The National Institute on Retirement Security has reported an even starker savings picture. The group said the median retirement savings amount for American workers is $955, a figure that includes workers with no retirement savings. Among workers with a positive retirement-savings balance, the median was $40,000, according to the institute.

Schroders said 81% of retirement-plan participants were at least slightly concerned they could run out of money in retirement. The firm also found that 69% believed higher healthcare, utility, insurance and housing costs have made retirement unreachable for their generation.

Another 55% said they could not save 10% of their paycheck for retirement because other expenses were getting in the way, according to Schroders.

Workers are tapping their plans

For many savers, the workplace retirement account is the main pillar. Nearly three-quarters of retirement savers surveyed said their workplace plan was their most important retirement asset, according to Schroders.

Still, 27% said they had reduced contributions to that plan. Of that group, 70% said they made the cut within the past two years.

Schroders also found that 27% had borrowed from their retirement plan. The most common reasons were paying down credit cards or other debt, covering unexpected family or personal costs, and keeping up with the rising cost of living.

Boyden told MarketWatch that rising costs are forcing hard choices, and retirement savings often gets pushed aside first. She also said the financial-services industry should give savers more help with debt and emergency funds.

Financial experts typically recommend keeping three to six months of basic living costs in a high-yield savings account for unexpected expenses or job loss, according to MarketWatch.

Some savers are sitting in cash

Schroders also found signs of confusion inside retirement accounts. About 24% of plan participants said they did not know how their retirement money was invested.

Among those who did know, 26% said their retirement savings were in cash. Schroders said respondents cited fear of market losses, a desire to diversify, and waiting for the right time to buy stocks.

Boyden told MarketWatch that for investors who do not expect to retire within five years, keeping a quarter of savings in cash can carry a significant opportunity cost.

This story draws on original reporting from MarketWatch.