401(k) Participants Lack Withdrawal Strategy, per TIAA Institute and Nuveen

Defined contribution retirement savers may be failing in their transition from accumulating savings to spending those funds, according to a new survey from the TIAA Institute and Nuveen.

While 71% of employees surveyed reported thinking at least somewhat about how they will withdraw money from their 401(k) account in retirement, only 22% said they have thought “a lot” about it, the firms’ 2025 Participant Sentiment Survey found. Meanwhile, knowledge about the mechanics of making retirement savings withdrawals lagged: Employees correctly answered only about one-quarter of survey questions on the topic, with nearly half failing to correctly answer a single question about retirement plan withdrawals.

But the research demonstrated that high-quality resources and an engaged employee experience can make a measurable difference in employee confidence and, potentially, retirement outcomes. Among employees who used both interactive and non-interactive planning tools provided through their retirement plan, 53% said they were very confident they would choose the best withdrawal strategy. That is nearly double the 28% of those who used neither type of resource who reported being very confident.

“With more than $8 trillion in assets spread across 725,000 plans serving 80 million active employees, 401(k) plans are the primary employer-provided retirement savings vehicle in the private sector,” said Brendan McCarthy, Nuveen’s head of retirement investing, in a statement. “Yet despite that scale, too many Americans arrive at retirement without a clear strategy for turning their savings into income that will last. And that gap has real consequences for long-term financial security.”

Retirement ‘Withdrawal Planners’ See Most Success

Participants who reported expecting their 401(k) savings to be their most important or a major source of retirement income were more likely to be “withdrawal planners.” The survey characterized planners as participants who have thought at least somewhat about the drawdown of their savings. About one-quarter (26%) of those expecting 401(k) savings to be their most important source of retirement income said they have thought a lot about how to make retirement withdrawals, while only 12% of those expecting their savings to be a minor source of retirement income reported doing so.

Despite their proximity to retirement age, only 19% of late-career 401(k) participants (those age 55 or older) reported thinking a lot about how to withdraw from their savings. Even among late-career participants who expected 401(k) savings to be their most important retirement income source, only 23% thought a lot about it. Mid-career participants—ages 25 through 54—were the most likely (26%) to think about it, followed by early-career employees (ages 18 through 24).

Among respondents identified as planners, 59% said it is very important for employers to provide resources to help employees determine how best to make retirement withdrawals. Nearly half (49%) said it is an employer’s responsibility to provide that guidance. The sentiments were even stronger among those who thought a lot about retirement withdrawals. In that group, 73% reported it was very important that employers provide resources, and 61% considered it an employer responsibility.

Of planners, 65% said they used plan-provided resources in considering how to make retirement withdrawals, with 60% using a mix of interactive and non-interactive resources, and 40% evenly split between using one or the other. Interactive tools were those that asked about a participant’s own situation (e.g., age, income and retirement goals) and then gave personalized feedback or guidance. Non-interactive tools were those that provided educational information not specific to the participant.

Among all participants, interactive tools were more often rated very helpful (52%) and very engaging (46%) than non-interactive resources (43% and 38%, respectively), while participants rated their trust in the tools about equally.

Participants who reported thinking a lot about making retirement withdrawals used plan-provided resources more often (77%) than those who only thought about withdrawals somewhat often (60%). The planners also more often used both interactive and non-interactive resources (52%) than the rest (34%).

Only about half (51%) of late-career planners reported using plan-provided resources, compared with more than 70% of their younger peers. Late-career users of interactive and non-interactive resources were the same: 39% each.

Retirement and Longevity Understanding Tends to Be Poor

Retirement fluency and longevity literacy, each of which enables effective retirement decisionmaking, tended to be poor among participants generally, the survey found. Longevity literacy was defined as an understanding of how long individuals tend to live upon reaching retirement age, while retirement fluency was defined as knowledge that promotes financial well-being in retirement.

TIAA and Nuveen fielded their 15-question assessment on Social Security benefits, Medicare benefits, saving for retirement, making withdrawals from retirement plans and long-term care. Participants correctly answered only 32% of the questions.

More than half (52%) correctly answered fewer than one-third of the questions. Participants correctly answered slightly more than one-third of the Social Security, Medicare and saving for retirement questions, and about one-quarter of the long-term care and making-retirement-withdrawals questions.

“Poor retirement fluency signals knowledge gaps that can lead to suboptimal decisions, which lower financial well-being in retirement—for example, [making] an uninformed decision about when Social Security benefits are claimed,” the report stated.

Longevity literacy was assessed with a multiple-choice question that gauged the understanding of how long individuals typically live after reaching age 65. While 33% of 401(k) participants correctly answered the question, 44% chose the answer that underestimated life expectancy, and 14% responded that they did not know.

“You can’t solve for income that lasts a lifetime if you don’t understand how long that lifetime might be,” said Surya Kolluri, head of the TIAA Institute, in a statement. “That’s why the combination of better education, stronger tools and lifetime income solutions within the plan itself is so important. When employers bring all three together, it works.”

The TIAA Institute and Nuveen surveyed more than 2,100 401(k) participants in October and November 2025. Survey responses were weighted by career stage to reflect the 401(k) participant population.