Retire with Confidence®
2025 Retirement Market Outlook
Retirement industry at a crossroads
Introduction
Evolving default investment options. Increasing plan adoption of retirement income solutions. Growing momentum for emergency savings programs. These are the major trends we see influencing the U.S. retirement industry in 2025. What challenges and opportunities will they bring?
Evolution of target date solutions and QDIAs
What’s happened?
Target date strategies dominate as default plan investments.
- $3.8 trillion target date assets as of June 30, 20241
What’s next?
Cost-efficient target date collective investment trusts (CITs) continue to gain market share over mutual funds, and demand is increasing for active/passive blends.
- 51% of target date assets are in CITs1
- 12% three-year compounded annual growth in assets for blend versus 10% for passive and 4% for active2
What to keep an eye on
Managed accounts appear poised for future growth, especially as participants near retirement and seek customized solutions that can incorporate individual financial circumstances.
Retirement income universe expands, plan adoption on the horizon
What’s happened?
The SECURE Acts of 2019 and 2022 spurred the creation of innovative retirement income products to support retirees who stay in plan.
What’s next?
More plan sponsors are taking a stance on retirement income.3
- 68% drop in plan sponsors with no stated opinion on in-plan solutions (from 59% in 2021 to 19% in 2024)
- 125% increase in plan sponsors offering or planning to add in-plan solutions (from 8% in 2021 to 18% in 2024)
What to keep an eye on
Diverse solutions demand careful evaluation. Industry professionals can help plan sponsors analyze and evaluate options to find the best fit for their participants.
A new era for emergency savings after SECURE 2.0
What’s happened?
SECURE 2.0 introduced new provisions for emergency savings, a key element of financial wellness.
What’s next?
Emergency savings solutions are expected to gain traction over the next three to five years. Among advisors and consultants:3
- 70% of advisors and consultants anticipate a rise in in‑plan solutions
- 52% expect an increase in out‑of‑plan solutions
What to keep an eye on
With SECURE 2.0, plan sponsors have new opportunities and new incentives to enhance workplace emergency savings and help support employees' financial well-being.
What we're watching
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2025 U.S. Retirement Market Outlook
Retirement Industry at a Crossroads
The 2025 U.S. Retirement Outlook from T. Rowe Price highlights key challenges and opportunities facing the defined contribution retirement plan landscape and offers some valuable insights on how to move forward.
Michael Davis
Head of Global Retirement Strategy
2025 U.S. Retirement Market Outlook
Policies Evolve to Support Growing Needs of Plans and Participants
Key developments in retirement policy include the potential for tax reform, SECURE 2.0 enhancements, and litigation reform, which could impact how the retirement industry moves ahead in 2025 and beyond.
Aliya Robinson
Director of Congressional Affairs
2025 U.S. Retirement Market Outlook
Evolution of Target Date Solutions and QDIAs
Qualified default investment alternatives, target date solutions, collective investment trusts, and managed accounts are transforming retirement investing in defined contribution plans.
Wyatt Lee, CFA®
Head of Target Date Strategies
Kathryn Farrell, CFA®
Target Date Portfolio Specialist
2025 U.S. Retirement Market Outlook
Retirement Income Universe Expands, Plan Adoption on the Horizon
As the industry creates new and innovative retirement income products, more plan sponsors are moving from gathering information to making decisions on which solutions to adopt.
Jessica Sclafani, CAIA®
Global Retirement Strategist
2025 U.S. Retirement Market Outlook
A New Era for Emergency Savings After SECURE 2.0
The SECURE 2.0 Act of 2022 expanded the landscape of potential solutions for emergency savings by introducing new opportunities and incentives for employers within their retirement plans.
Rachel Weker
Senior Retirement Strategist
Important Information
1Total assets includes both mutual funds and CITs as of June 30, 2024 (Morningstar). Percentages in CITs represent CIT assets only. CITs are institutional investment vehicles designed for qualified retirement plans.
2Sway Research, as of December 31, 2023.
3T. 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.
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