Only 19% of Near-Retirees Plan 401(k) Withdrawals as $8 Trillion Sits in Employer Accounts
Updated
Updated · USA TODAY · Jun 24
Only 19% of Near-Retirees Plan 401(k) Withdrawals as $8 Trillion Sits in Employer Accounts
3 articles · Updated · USA TODAY · Jun 24
Summary
Only 19% of near-retirees have seriously considered how to draw income from their 401(k)s, and workers answered just about one-quarter of withdrawal questions correctly in a Nuveen-TIAA Institute survey of 2,100-plus workers.
Nearly half could not answer a single withdrawal question correctly, underscoring a gap that experts say can leave retirees either overspending and running short or underspending and sacrificing their standard of living.
More than $8 trillion is held in 401(k) plans covering 80 million active employees, yet many workers also underestimate how long they will live after 65, weakening efforts to make savings last.
Researchers pointed to spending frameworks such as the 4% and 4.7% rules, but said many savers still want more certainty than self-managed withdrawal formulas can provide.
Lifetime-income options inside 401(k) plans, including lower-cost annuities like those added in the 2023 UAW auto contracts, are emerging as a hybrid alternative to traditional pensions.
With $8 trillion at stake, are annuities the solution to retirement anxiety or just an expensive security blanket?
Is America's retirement crisis a failure of personal planning or a system that demands everyone become a financial expert?
Beyond the 4% rule, what simple strategy best protects retirees from market crashes and outliving their money?
The 2025 Retirement Paradox: High 401(k) Balances, Surging Withdrawals, and America’s Income Planning Gap
Overview
In 2025, Americans saw their retirement savings grow thanks to strong market performance, with Vanguard 401(k) participants enjoying high returns and major stock indexes rising sharply. Despite this wealth accumulation, many people lack a clear plan for turning their savings into steady retirement income. This gap is made worse by limited knowledge about withdrawals and how long retirement might last. As a result, even with more money saved, many face the risk of outliving their assets, highlighting the urgent need for better education and planning tools to help retirees manage their finances effectively.