As the landscape of retirement in the United States continues to evolve, a new study from Allspring Global Investments sheds light on the mounting challenges facing retirees and near-retirees. Released in November 2025, the report titled “By Default or by Design? The retirement landscape is ready for a change” highlights a troubling trend of increasing financial insecurity among Americans approaching or in retirement. Based on a comprehensive survey conducted by Escalent between April 25 and May 16, 2025, the study polled 1,515 U.S. adults who serve as primary or joint household financial decision-makers, each with at least $200,000 in household investible assets. The sample was evenly split between 726 near-retirees with an average age of 61 and 789 retirees averaging 71 years old. Data was weighted to reflect broader population demographics, including assets, age, gender, race, ethnicity, and region, providing a robust snapshot of the current retirement environment.
The core message of the study is that while default features in defined contribution plans—such as automatic enrollment and target date funds—have significantly improved participation since the Pension Protection Act nearly two decades ago, these mechanisms are no longer sufficient. With traditional pensions declining and concerns over Social Security’s sustainability growing, many Americans are left navigating an incomplete system. Only six in ten respondents expressed feeling financially secure about their retirement, a decline from previous years, particularly among those aged 65 to 69 in both retiree and near-retiree categories. This insecurity is compounded by unrealistic spending expectations, where retirees anticipate withdrawing 7% annually from their savings, and near-retirees project 6%. Such rates could deplete nest eggs prematurely, especially given longer life expectancies and volatile markets.
A significant portion of the insecurity stems from heavy reliance on Social Security, which accounts for nearly 40% of retirees’ income. Yet, knowledge gaps are rampant: only one in ten near-retirees could correctly answer basic questions about the program. Common misconceptions include underestimating the benefits of delaying claims; many believe postponing adds just 4% or less per year, when in reality, delaying from age 62 to 70 can boost monthly benefits by nearly 80%—from an example of $2,200 to $4,000. Those who demonstrated accurate knowledge were twice as likely to plan on delaying until age 70 and more inclined to take appropriate investment risks, underscoring the value of education in alleviating fears.
Retirement satisfaction varies widely, with financial advisors playing a pivotal role in enhancing outcomes. Advised individuals reported higher levels of security, with 66% feeling confident about a comfortable retirement compared to 55% of those without advisors. They were also more strategic in their approaches: 24% prioritized withdrawals from tax-exempt accounts first, versus 13% of unadvised respondents, and 88% felt comfortable living on savings before drawing Social Security, against 73% for the unadvised group. Advised retirees and near-retirees tend to be wealthier, healthier, and better educated, which correlates with greater control over their financial futures. In contrast, unadvised individuals struggle with understanding their needs, minimizing taxes, and optimizing Social Security, leading to lower overall satisfaction and heightened anxiety.
Perceptions of retirement are shifting toward greater uncertainty, influenced by external factors like potential changes to Social Security and the broader transition from employer-funded pensions to individual responsibility in defined contribution plans. Many decisions are made “by default,” such as claiming benefits early out of fear that rules might change or benefits could be reduced. Anecdotal advice, like “get the cash while you can,” often guides choices rather than informed strategy. Near-retirees recognize the need for their savings to “work harder” but lack clear guidance on balancing risks in asset allocation. Tax efficiency is another overlooked area; while after-tax income is deemed more important than gross returns, few prioritize withdrawal strategies that minimize tax burdens. Skepticism toward emerging technologies like artificial intelligence is prevalent, with 53% of unadvised respondents expressing distrust compared to 43% of advised ones, though AI is seen as a potential enhancer for personalization when paired with human oversight.
Demographic differences further illuminate the disparities in retirement readiness. Women, near-retirees, and younger retirees report lower security levels than in 2023. Needs extend beyond age, influenced by health, career paths, and other savings sources. Advised versus unadvised groups show stark contrasts in confidence and strategy. Withdrawal preferences reveal a lack of intentionality: 53% base decisions on taxable status, 17% avoid withdrawals altogether, 22% have no plan, and 8% withdraw equally from all accounts. Only one in five retirees and near-retirees start with taxable accounts to defer or avoid taxes, often opting instead for choices based on account size, returns, or convenience.
The study critiques the overreliance on target date funds, which, while effective for younger investors by automatically adjusting risk based on age, fail to address the diverse needs of those nearing or in retirement. A striking 84% of near-retirees prefer alternatives, and target date funds represent only 65% of 401(k) assets and a mere 2% of IRA assets, according to Cerulli data cited in the report. Defined contribution plans often lack sufficient income-focused options, with an average of one bond strategy for every three equity ones, creating an “uphill battle” for plan sponsors. Mid-career workers crave more flexibility, yet options remain limited, leading to asset rollovers that increase costs and reduce retention.
In calling for personalized solutions, the study advocates a shift from default-driven approaches to intentional, outcome-oriented designs. Recommendations include expanding investment menus to include target date funds alongside equity income and tactical bond strategies, leveraging core active bonds to exploit market inefficiencies. Tax-efficient planning is emphasized, such as prioritizing withdrawals from taxable accounts first, utilizing Roth conversions—especially with the new $6,000 senior deduction under recent legislation—and employing tools like tax-loss harvesting, separately managed accounts, direct indexing, and ETFs to flatten tax burdens over time. Case studies in the report demonstrate these strategies’ impact: for a couple with limited savings ($60,000 taxable, $180,000 traditional IRA, $60,000 Roth IRA, $48,000 Social Security, $55,000 spending needs), optimizing asset location and delaying benefits can maximize after-tax income. Similar optimizations apply to moderate ($180,000 taxable, $330,000 traditional IRA, $90,000 Roth IRA, $73,000 delayed Social Security, $80,000 spending) and substantial portfolios ($700,000 taxable, $1,200,000 traditional IRA, $300,000 Roth IRA, $98,000 delayed Social Security plus $90,000 other income, $200,000 spending), showing how personalized tweaks can enhance longevity and security.
Education on Social Security emerges as a low-cost, high-impact solution, with behavioral nudges encouraging delays that yield an 80% benefit increase. Advisors are urged to integrate AI judiciously as a “personalized CFO,” incorporating comprehensive data on assets, liabilities, health, and career to tailor advice, while maintaining human discretion to build trust. Plan sponsors should improve menus to curb rollovers, promote “roll backs” of external savings into plans, and provide seamless guidance to help participants assemble suitable allocations without overwhelming them.
The report’s calls to action emphasize collaboration among plan sponsors, advisors, and asset managers to modernize the system. By understanding and addressing diverse needs, stakeholders can empower better saving and income strategies. Allspring encourages reaching out to experts like Nate Miles, Head of Retirement, or Holly Swan, Head of Wealth Solutions, for further insights, or visiting their website to explore resources. Ultimately, the study posits that purposeful planning and thoughtful investing can deliver not just financial outcomes but a more secure and fulfilling retirement for all, challenging the status quo to foster a future where retirement is designed for success rather than left to chance. This proactive stance is crucial as demographic shifts and economic pressures continue to reshape expectations, ensuring that personalized solutions become the new standard in addressing the growing tide of financial insecurity.
