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2025 U.S. Retirement Market Outlook

U.S. Retirement industry at a crossroads

February 2025

Key Insights

In 2025, we see major trends influencing the U.S. retirement industry.
Target date strategies dominate as default plan investments.
More plan sponsors are taking a stance on retirement income.¹
Emergency savings solutions are expected to gain traction over the next three to five years among advisors and consultants.¹

Our 2025 Retirement Market Outlook offers key insights in three areas that we expect to gain added traction: evolving default investment options, increasing plan adoption of retirement income solutions, and the growing momentum for emergency savings programs. Our outlook highlights the challenges and opportunities presented by these trends.

Target date strategies dominate as default plan investments.

Qualified default investment alternatives (QDIAs) transformed U.S. retirement plan investing, with target date strategies gaining prominence due to their automated, age‑based asset allocation. There is a growing interest in these strategies to incorporate blend approaches—which combine active and passive investments to enhance cost efficiency and the benefits of active security selection. Enhanced levels of interest from consultants and advisors in this area suggest sustained growth in this target date approach.

Blend target dates are gaining momentum

(Fig. 1) Target date investment management style consultants are most likely to recommend

Sources: The Cerulli Report I Defined Contribution Consultant Report 2022 and The Cerulli Report I Defined Contribution Consultant Report 2023.

More plan sponsors are taking a stance on retirement income.¹

The past year has witnessed a flurry of new U.S. retirement income products. As this trend continues, we expect the industry to focus on not just product creation, but also on plan adoption. However, it’s important to recognize that retirement income isn’t a priority for every plan—some may prioritize student loan repayment or emergency savings programs based on their participant needs. Overall, data show increasing interest among plan sponsors in retaining retirees in their plans, and many are proactively inquiring about the landscape of retirement income products and services. Consultants and advisors will continue to be essential in helping plan sponsors select suitable tailored retirement income capabilities and providing ongoing support.

More plan sponsors are taking a stance on retirement income

(Fig. 2) Plan sponsor views on in‑plan retirement income investment solutions

Source: T. Rowe Price, 2024 Defined Contribution Consultant Study and 2021 Defined Contribution Consultant Study. See Appendix for additional detail.

Emergency savings solutions are expected to gain traction over the next three to five years. Among advisors and consultants.¹

There is growing recognition among employers, consultants, and advisors about the importance of overall financial wellness, and emergency savings is often a central aspect of that discussion. We expect to see continued conversations on the adoption of both in‑plan and out‑of‑plan emergency savings solutions.

Participants are not saving enough for retirement

(Fig. 3) Participant views on their retirement savings

Participants are not saving enough on retirement. Participant views on their retirement savings. Pie chart shows that 46% of participants believe they are saving enough. 33% don’t believe they are saving enough. 21% are not sure if they are saving enough. The number of participants that don’t believe they are saving enough increased by 4 points since 2020.

T. Rowe Price 2024 Retirement Savings and Spending Study. See Appendix for details.

Read the full U.S. Retirement Market Outlook.

T. Rowe Price launches target date portfolios for Canadians

Retirement Insights

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¹T. Rowe Price 2024 Defined Contribution Consultant Study. This study included 48 questions and was conducted from January 12, 2024, through March 4, 2024. Responses are from 35 consulting and advisor firms with over 134,000 plan sponsor clients and more than $7.5 trillion in assets under administration.

Important Information

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested. The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.
Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.
The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.
This material was prepared for use in the United States for U.S.-based plan sponsors, consultants, and advisors, and the material reflects the current retirement environment in the U.S. It is also available to Canadian-based plan sponsors, consultants and advisors for reference. There are many differences between the two nations’ retirement plan offerings and structures. Therefore, this material is offered to accredited investors in Canada for educational purposes only and does not constitute a solicitation or offer of any product or service.
Canada—Issued in Canada by T. Rowe Price (Canada), Inc. T. Rowe Price (Canada), Inc.’s investment management services are only available to Accredited Investors as defined under National Instrument 45‑106. T. Rowe Price (Canada), Inc. enters into written delegation agreements with affiliates to provide investment management services.
Residents of Quebec may request a French translation of this document. Please contact CanadaTranslationRequests@troweprice.com. Les résidents du Québec peuvent demander une traduction française de ce document. S'il vous plaît contactez CanadaTranslationRequests@ troweprice.com.
© 2024 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the Bighorn Sheep design are, collectively and/ or apart, trademarks of T. Rowe Price Group, Inc.

202501-4107796

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