Everyone but Gen Z is saving less for retirement. What's happening?

Even as more Americans save less and borrow more from their retirement funds, Gen Z shines as the only generation to have bucked that trend over the past three years, according to Dayforce's second annual State of Retirement Savings report.

The total savings rate for full-time employees − including those who save for retirement and those who don't − declined to 8.9% in 2025 from 9.2% the year before and the first annual decrease in three years, the benefits platform company said. Total savings rate is the combined percentage of an employee's gross income contributed to retirement plans, including the employee's own contributions and any matching contributions by the employer.

In contrast, Gen Z's savings rate has risen every year since 2022, most recently jumping to 6.2% in 2025 from 5.9% in 2024.

The findings are "sobering," but Gen Z "shows that improving retirement savings for millions more workers is possible," said Jason Rahlan, global head of sustainability and impact at Dayforce.

How much less are Americans saving?

More than a quarter (26%) of Americans who save for retirement reduced their annual contributions last year, Dayforce said. After two straight years of gains, total contributions from both the employer and the employee dropped by 5% last year to $5,554 from $5,860 in 2024. But every age group's total contributions remain above 2023 levels, the report showed.

More Americans are also dipping into retirement savings to prop up their spending, the report showed. Loans from retirement accounts rose for the third consecutive year and are now 22% higher than in 2022. Last year, 18.6% of Americans took a loan from their retirement accounts, up from 15.2% in 2022 and a four-year high.

Overall retirement plan participation also slipped to 77.5% from 78.6% in 2024, but Gen Z's involvement increased, Dayforce said. Gen Z's participation rose last year to 69.5% from 63.4% in 2022.

"Gen Z is challenging the stereotype when it comes to young people and their finances," said Holly O’Neill, president of Consumer, Retail and Preferred Banking at Bank of America, in a release for Bank of America’s 2025 Better Money Habits financial education study last year. "Even though they’re facing economic barriers and high everyday costs, they are working hard to become financially independent and take control of their money."

Are some groups falling behind more than others?

Middle-income Americans earning $50,000 to $150,000 a year saw the largest declines in savings rates, participation and employee contributions last year, Dayforce said.

The gender gap also remains: Men's total contributions to retirement accounts were $6,671 annually, compared with women's $4,781 in 2025, according to data.

By ethnicity, Asians topped with total annual contributions of $7,936, followed by White people with $7,605. Black Americans contributed $3,235 and Latinos $2,464, the report said.

Are the findings surprising?

Declining savings rates aren't surprising considering the financial headwinds Americans have been facing. The findings reveal a "workforce under growing financial pressure and affordability strain as the cost of living rises," Dayforce said in an email.

Gen Zers, though, have been helped by improvements in 401(k) plans, said Nicky Zhang, Vanguard investment strategist and coauthor of Vanguard's retirement outlook last November.

"Younger workers are benefiting from better plan design features like auto-enrollment, automatic escalation of saving rates over time, and investment in qualified default investment alternatives," he said. Mandatory auto-enrollment and escalation for new plans began under SECURE 2.0 on Jan. 1, 2025.

But the good news is Americans expect (and plan) to rebound, Vanguard said in its Cash and Savings Survey of more than 1,000 adults last October. "Nearly 75% of Americans fell short of their saving and spending resolutions in 2025, but most are optimistic that 2026 will be their year for a 'resolution rebound,' " it said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.