2025 DC Retirement at a Glance

1. WHO’S WATCHING YOUR 401(K)? – In an analysis of 764,729 Form 5500 filings, nearly 84% of US-based retirement plans have at least one likely red flag from a regulatory or fiduciary violation related to the Employee Retirement Income Security Act (ERISA). Red flags were defined as instances of either “infractions, fineable offenses, fiduciary failure, or plan malpractice.” (Source: Abernathy Daley 401k Consultants)

2. THE COST OF REBALANCING– In a study titled “The Unintended Consequences of Rebalancing,” researchers found that the front-running of portfolio rebalancing among pension funds and other large institutional investors collectively costs $16 billion per year, or an average of nearly $200 for the average US household. (Source: Max M Fisher College of Business)

3. MORE RETIREMENT SAVERS – In 2024, the percentage of private sector workers participating in 401(k)-type plans reached 50% for the first time ever, and 70% have access to a plan. Ten years ago, 60% of private sector workers had access to a 401(k) and just 43% were participating. Despite the increase, 40% of US workers aren’t saving enough to maintain their current lifestyle in retirement. (Source: WSJ)

4. THANKFUL FOR A 401(K) – 48% of participants in defined contribution retirement plans say that they wouldn’t be saving for retirement if their employer didn’t offer a plan. Among lower income Americans (Household Income < $50K), the percentage was even higher at 71%. (Source: Investment Company Institute)

5. KEEP THE STATUS QUO – 85% of Americans disagree with the statement that the government should take away the tax advantages of defined-contribution accounts, and 86% disagree with the idea that individuals should not be allowed to make their own investment decisions in their retirement accounts. (Source: Investment Company Institute)

6. RECORD ANNUITY SALES- AGAIN – Total annuity sales in 2024 rose 12% to a record $432.4 billion. Index annuity sales were especially strong as Fixed Indexed Annuity sales increased 31% y/y to a record $125.5 billion while Registered Index-Linked Annuities rose 37% to $65.2 billion, marking the 11th straight year of record sales. (Source: LIMRA)

7. PENSIONS TURNING MORE PRIVATE – As commercial banks have taken a smaller role in credit market lending, private credit investments have surged. In the year ending 9/30/24, defined-benefit funds of the 200 largest US retirement plans increased private credit investments 57% on a year/year basis, rising from $126.2 billion to $198.4 billion. (Source: Pensions & Investments)

8. DEBT INTO RETIREMENT – 97.1% of US retirement age adults (aged 66–71) maintain a level of nonmortgage debt. Of the median $11,349 in nonmortgage debt held, auto loans account for 33.3%, credit card debt accounts for 31.7%, and 15.6% is the result of student loan debt. (Source: LendingTree)

9. TARGETS TOP $4 TRILLION – Total assets in target date funds (TDFs) reached a record $4.1 trillion in 2024. The industry’s seven largest TDF providers hold $3.63 trillion (88%) of all industry assets. Vanguard, the largest provider of TDFs, accounts for 36% of the entire industry’s assets. (Source: Vanguard)

QUESTION: Americans aged 70 and older control 30.9% of all US wealth, which is up from 23.1% in 2014. With women having longer life expectancies than men, how much wealth will be inherited by widowed women in the coming decades, and what percentage switch financial advisers after a spouse dies?