Retirement investors are suffering a crisis of confidence that new solutions are poised to remedy.
After a prolonged period of U.S. exceptionalism that helped buoy investor confidence, the start of 2025 has been marked by a rapidly evolving news cycle, back-and-forth policy shifts, tariff uncertainty, and volatility shaking the confidence of those investing for retirement. Investor and advisor resilience will continue to be tested. In the U.S, our defined contribution structure excels in a retirement system that thrives on individual empowerment. But it鈥檚 time to evolve how we empower retirement savers to navigate this instability.
Saving for retirement remains a key financial goal for Americans, and progress is underway. A decade ago, only 63 percent of US workers had access to a workplace retirement plan, with just 43 percent participating. Today, those numbers have risen to 70 percent and 50 percent, respectively, driven predominantly by more accessible retirement solutions from asset managers
Yet, challenges remain. While 58 percent of 51吃瓜黑料鈥檚 active retirement plan participants contribute at least 9 percent of their annual income toward retirement, a significant portion of Americans still feel unprepared. According to our proprietary research, 34 percent of workers worry they鈥檙e falling behind on their goals, and 32 percent are uncertain about maintaining their standard of living in retirement. Progress is real, but there鈥檚 still work to be done.
It鈥檚 time to evolve how we empower retirement savers to navigate market instability.
Target date funds (TDFs) remain a major success story in the retirement savings landscape. Since 2019, TDFs have captured nearly all net inflows into defined contribution plans, propelling total assets in TDFs to nearly $4 trillion in 2024. By simplifying investment decisions, automatically adjusting risk over time, and providing a structured path to retirement goals, TDFs empower savers to stay on track and help more Americans achieve long-term financial security.
Despite significant improvements in investment solutions, investor behavior remains critical to long-term success. Asset managers play a key role in reinforcing that investing involves risk and that market pullbacks are normal. Since 1980, the US stock market has, on average, declined by at least -13.5 percent at some point during any given year, yet most years still end positively, with an average 9 percent gain. Volatility is a natural part of investing, and those who stay disciplined are more likely to achieve their long-term retirement objectives.
Interestingly, the opposite can also be true. Significant runs in the market, such as the more than 60 percent gain in the S&P 500 since September 2022, can leave investors overly exposed to risk鈥攑articularly investors nearing retirement. Professionally managed solutions are designed to counteract these tendencies by automating investment decisions for investors. These include rebalancing and maintaining a disciplined strategy, reducing the risk of human bias, and helping investors stay the course during market stress and expansion periods.
Asset managers continuously evolve their offerings to address the diverse needs of retirement investors. While TDFs can be an excellent option for many investors, innovations in the retirement investing space, including customization and modern asset classes, create opportunities.
For example, target date solutions with retirement income are designed to help mitigate longevity risk, or the risk that a retirement investor outlives their wealth. Beyond adjusting the asset allocation mix as an investor approaches retirement, these solutions integrate guaranteed income solutions into the target date fund鈥檚 glidepath. Another innovation involves personalized target date solutions enabled by recent technological advances. These plans offer savers the benefits of a TDF and personalized choices to invest in strategies tailored to their individual goals, risk tolerances, and income needs.
Private investments are also gaining momentum within modern retirement solutions. Historically, public pension plans, insurance companies, and institutional investors have benefited from private markets鈥 diversification, resiliency, and return potential. Now, innovations make these opportunities more accessible to retirement investors through new vehicles that incorporate private credit and real assets. Retirement plan savers are fundamentally long-term investors who should benefit from private assets with the potential for higher risk-adjusted returns and greater income generation.
Retirement investors are suffering a crisis of confidence, and they deserve solutions that are designed to withstand market volatility while participating in global growth. By leveraging modern tools investors can construct sustainable, realistic retirement portfolios well- positioned to help manage market volatility. Resilient retirement portfolios are still possible, but asset managers must continue pushing the boundaries on investing, protecting, and saving to ensure savers can move forward with confidence, regardless of what markets bring.
This article originally appeared on the 2025 Milken Institute Global Conference .
What鈥檚 next?
Dig into the data and read the full report at the Global Financial Inclusion Index site.
