Workers are more confident about retirement, but there’s a catch

American workers have grown more confident in the past year about their finances in retirement, according to survey data released this week by the Nationwide Retirement Institute. But this sentiment “may not be grounded in financial knowledge” as many people are making decisions that could negatively affect their financial future.

The institute — a division of Nationwide Mutual Insurance Co. — commissioned an online survey over the summer of 2,200 retirement plan participants, along with 600 public and private plan sponsors. It found that 79% of workers have a positive outlook toward their retirement savings, up from 65% in 2024, while the share who believe they’re on track with retirement preparation rose from 65% to 71% during the year.

But these positive developments are tempered by “uncertain market conditions.” Nationwide also found that nearly half of plan participants have made “reactive decisions” to shift their funds to more conservative assets. And the percentage is slightly higher among people ages 22 to 34 who have more time to invest and save.

Furthermore, respondents who expressed the highest levels of confidence were more likely to make risky financial decisions. They were 12 percentage points more likely to have reallocated savings to more conservative assets, and they were 10 points more likely to have made emotional decisions about investments that they later regretted, such as:

• Selling at the bottom of the market
• Buying too high after a market recovery
• Lack of diversification in their investment portfolio
• Pausing their retirement contributions

Nationwide warned that “these actions run counter to long-term investment principles and reflect instinctive, rather than informed, choices.” It pointed to additional data from The American College of Financial Services, showing that many people lack “retirement literacy,” including incorrect knowledge of how compound interest works.

“These findings show that feeling confident isn’t the same as being prepared. Even confident investors make decisions that undermine their long-term financial security,” Cathy Marasco, Nationwide’s vice president of protected retirement, said in a statement.

 “To prevent letting emotion drive decisions, workers should make sure they’re taking advantage of the best advice they can get from a financial professional or resources provided by many workplace retirement plans for those who may not have access to an advisor. They may also find security in innovative solutions that may be offered by their workplace retirement plan, like lifetime income investment options that can deliver protection without sacrificing growth, even in volatile markets.”

“Even financially knowledgeable investors often make emotional decisions during market volatility,” said Eric Ludwig, director of the Center for Retirement Income at The American College of Financial Services. “The solution isn’t just more education, but plan designs that account for human psychology. Features like lifetime income options can help workers avoid the temptation to make reactive decisions in the first place, regardless of their knowledge level.”

The survey results indicated that employees want stability in their retirement plans. The majority want to have an automatic enrollment feature (73%) and automatic contribution increases (64%). But many workers don’t have access to these tools.

Nationwide reported that in the private sector, about one-third of companies don’t have auto enrollment, and about half don’t have automatic increases.

The division between employer and employee is even more stark when it comes to generating lifetime income. About 90% of employees want “guaranteed monthly income that lasts for life,” but less than 40% of private employees offer this option.

“While many employers cite higher employee costs as a barrier, 85% of private sector workers say they would be willing to pay more today for protected investment options,” Nationwide said.