2025 Personal Finance Research Studies: Implications for 403(b) Plan Participants
December 13, 2025
By Barbara O'Neill, CFP®, AFC®
Personal finance research generates new knowledge, answers questions, solves problems, and informs financial decision-making and behavior. Converting personal finance research findings into practice involves translating data analyses into clear, actionable guidance that can be applied in daily life.
Everyday people, not to mention financial educators and advisors, rely on research to shape best practices such as investment selection and retirement savings withdrawals. Ultimately, the goal is to bridge the gap between theory and behavior, helping people make smarter financial decisions supported by reliable evidence.
This post describes key findings and implications from fourteen 2025 personal finance research studies grouped into four categories: retirement planning, investing, financial knowledge and behavior, and other topics. It also describes a meta-analysis (i.e., a study of studies) about financial well-being. The post concludes with three “need to know” facts and six take-away action steps.
Retirement Planning Research
“Magic Number”
The Northwestern Mutual 2025 Planning and Progress study (N= 4,626) found that the “magic number” that Americans said they needed to retire comfortably was $1.26 million. However, among Americans with retirement savings, 25% say they have saved just one year or less of their current annual income.
Implications: The disconnect between desired and actual savings indicates a need for increased retirement savings. Saving even 1% or more of pay in a 403(b) plan can make a big difference over time.
RMD Withdrawals
An academic study found that, for most risk-averse investors, taking required minimum distributions (RMDs) in equal installments throughout the year is the optimal withdrawal strategy, followed by a hybrid strategy of withdrawing half the RMD in December and the other half in 12 equal monthly installments.
Implications: Frequent RMD withdrawals have less volatility risk than lump sum distributions even though lump sums are preferred by many retirees. They might consider a different RMD withdrawal process.
4.7% SAFEMAX
“4% Rule” researcher Bill Bengen found that the new SAFEMAX (the percentage used to calculate the first-year withdrawal from retirement savings to avoid outliving assets) is now 4.7% of the account balance. The new SAFEMAX was calculated by adding four asset classes.
Implications: Retirees might consider taking a slightly larger withdrawal percentage from non-RMD retirement savings if they have a diversified portfolio. The trade-off: higher withdrawal rates will deplete savings faster.
Financial Satisfaction
Researcher David Blanchett found that older adults’ financial satisfaction increases even as their spending decreases. Many retirees decrease their spending, not because of hardship, but because their needs and wants change. Spending drops about 20% upon retirement, but only 7% of households report a decline in well-being.
Implications: Retirement success is not matching pre-retirement spending levels. Rather, retirees who live on less can be financially content. This finding puts less pressure on workers to save more than they are able to.
Retirement Account Balances
Research by Fidelity Investments, a vendor for 401(k)s and 403(b)s, found that account balances reached record highs in Q3/2025. The average 401(k) and 403(b) account balances were $144,400 and $131,200, respectively, up 9.1% and 10% from Q3/2024. Roth accounts are of particular interest to young adult savers.
Implications: Retirement planning is a long-term proposition. 403(b) plan participants who save consistently can position themselves for a financially secure retirement.
Investing Research
Investment Knowledge
Zhang et al. studied the role of investment-specific knowledge in decisions to use apps, financial advisors, and social networks. Those with high objective (fact-based) knowledge were less likely to rely on additional information sources while those with high subjective (personal beliefs) knowledge were more likely.
Implications: Investors with high subjective investment knowledge may have greater confidence in external information sources while those with high objective knowledge opt to use their own internal knowledge base.
Target Date Funds (TDFs)
TDFs are a popular choice in 403(bs) and other defined contribution plans. A paper by Kohlmeyer et al. suggests this is because TDFs provide a remedy to the “paradox of choice” where plan participants are confronted with a confusing array of investments and asset allocation and rebalancing decisions.
Implications: TDFs can reduce cognitive overload, overwhelm, and post-purchase regret, especially for inexperienced investors. TDFs require just one choice: typically, an investor’s planned retirement year.
Financial Knowledge and Behavior
Financial Capability
Findings from the sixth wave of the FINRA Foundation’s National Financial Capability Study (N = 25,500+) showed a decline from previous waves in U.S adults’ ability to make ends meet and save for emergencies. Many households, particularly middle-income ranges, were struggling financially despite stable incomes. In a test of financial knowledge, the percentage of respondents who answered the inflation question increased.
Implications: Increased costs have clearly put a strain on family finances. Less than half of respondents (46%) have three months of living expenses set aside for emergencies. NFCS findings speak to the need for regular savings (even small amounts) and expense reduction strategies to “claw back” against inflation.
Financial Literacy
The 2025 TIAA Institute-GFLEC P-Fin Index survey (N =3,371) found U.S. financial literacy at the same low level as the first survey in 2017. On average, U.S. adults answered only 49% of 28 index questions correctly with women lagging men by an almost 10-point gender gap. Retirement literacy (6 questions) was also low.
Implications: Knowledge matters. People with greater financial literacy tend to have better personal finance outcomes than those with lesser levels. A useful action step is to learn something new about personal finance every day.
Other Research Topics
Long-Term Care (LTC)
Data from Morningstar predict that 26% of Americans will run out of money in retirement. When LTC expenses are included, the percentage increases to 41% and 52% for single women, who have more longevity and fewer resources. The worst impact will be felt by the middle two income quartiles (i.e., the middle class).
Implications: Morningstar projects that 43% of boomers will need LTC. Longevity and LTC risk are related. These findings highlight the need to have a LTC plan (e.g., self-insurance, LTC insurance, government aid).
Affordability
2025 research data from PNC Bank (N = 1,500) found that 67% of American workers are living paycheck to paycheck, up from 63% in 2024. In addition, consumers paid nearly 25% more for groceries in 2025 than they did in 2020. Everything feels more expensive now, making it harder for Americans to save and repay debt.
Implications: Consumers do not have much control over costs of living but they can make themselves more financially resilient by creating a realistic budget, opening a high-yield savings account, and paying down debt.
Financial Wellness
A Pew Research Center survey found a majority of Americans say they are in fair (40%) or poor (17%) financial shape and 28% of respondents expect their financial situation to be worse next year, 37%, better, and 35%, about the same. 48% have an emergency fund for three months expenses and 26% can’t pay all their bills.
Implications: This study provided ample evidence of financial fragility. Ways to alleviate financial stress include building an emergency fund, reducing debt, increasing income, reducing expenses, and budgeting.
Biggest Financial Fear
A study by Allianz Life Insurance (N = 1,000) found that nearly two-thirds (64%) of Americans worry more about running out of money in later life than about their death. In addition, 62% are not saving as much money for retirement as they would like and 54% said inflation contributed to their fear of running out of money.
Implications: Given the fear of wealth depletion and longevity risk, older adults need a reliable, guaranteed lifetime income stream. Options beyond a pension include delaying Social Security for a larger inflation-adjusted benefit, working longer (even part-time), and purchasing immediate or deferred income annuities.
Adult Child Support
An Ameriprise study (N= 3,010) found that more than three-quarters of parents contribute to children’s large one-time expenses and 63% help with everyday expenses. 36% worry about the impact of children’s expenses on their own financial goals and trade-offs between providing family support and financial independence.
Implications: The study also found that 78% of respondents with financial advisors felt advisors were helpful in decisions regarding their children. Someone outside the family can provide valuable third-party analysis.
Research Results
Since this post is all about research studies, this section describes a meta-analysis of nine experimental intervention (e.g., financial education and skills training) studies. It provided evidence that improving financial literacy and behavior was associated with improved financial well-being. Results can be used to support financial education programs and other targeted interventions to build financial capability.
Three Summary Statements
- Numerous 2025 studies provide empirical evidence of financial fragility and low financial literacy.
- Retirement savings withdrawals, including RMDs, are a key concern of older adults.
- Inflation impacts and lack of affordability were key themes in financial wellness “snapshot” studies
Six Smart Strategies
No. 1: Save Early and Often — Save what you can even if you don’t reach $1.26 million. You’ll likely be happy even if your spending drops.
No. 2: Make SAFEMAX Withdrawals — Heed research findings that suggest a safe withdrawal rate from retirement savings to avoid outliving assets.
No. 3: Consider TDFs — Explore TDFs for convenience and to avoid the “paradox of choice,” especially if you do not have a pension.
No. 4: Increase Your Financial Literacy — Learn one new thing about personal finance every day from blogs, podcasts, webinars, social media, and more.
No. 5: Claw Back Against Inflation — Determine action steps to increase income and/or reduce expenses to offset rising prices that rarely go down.
No. 6: Get Help When Needed — Consider how an advisor can assist with savings withdrawals, investment choices, RMDs, and LTC planning.
In Summary
Research results provide evidence-based, tested information rather than opinions or assumptions. The fourteen studies summarized above investigated a wide swath of personal finance topics. Study those that are most relevant to your life and take action accordingly.
This post provides general personal finance information and does not address all the variables that apply to an individual’s unique situation. It should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.
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Dr. O'Neill is the owner/CEO of Money Talk: Financial Planning Seminars and Publications where she writes, speaks, and reviews content about personal finance. She is a Distinguished Professor Emeritus at Rutgers University and a long-time 403(b) plan participant.