Only 5% of Generation Z and 16% of Millennials say Social Security will be their primary source of retirement income, an indication that younger generations are likely skeptical about the program’s fiscal health and future existence. According to the latest Cerulli Edge—Americas Asset and Wealth Management Edition, 401(k) participants are more likely to rely on personal retirement accounts, providing an opportunity for recordkeepers to play a larger role in guiding participant decision-making.

Cerulli’s research finds that more than half (58%) of Generation Z and Millennial 401(k) participants expect their personal retirement accounts to be their primary source of income in retirement. Meanwhile, 49% of all active 401(k) participants identify personal retirement accounts as their anticipated primary source of retirement income.

Despite this, Cerulli finds many 401(k) participants are disengaged from their retirement accounts. While the widespread adoption of default investments and automatic plan features has helped more individuals save for retirement, it has also contributed to participants taking a “set and forget it” approach to saving.

While some participants use recordkeeper retirement planning resources, there is considerable room for improvement. In 2024, 28% of participants said they had used their recordkeeper’s online saving tools and calculators in the past year, and 29% called their recordkeeper, although very few of those calls were about retirement planning. Cerulli's research found that only 12% of those participants called “to assess retirement readiness or develop a retirement income strategy.” More often, calls were for changing investments, technical assistance, understanding fees, and moving money out of their 401(k).

Cerulli suggests recordkeepers continue to develop and refine retirement planning tools to help participants set and update their retirement goals, understand where they stand relative to those goals, and provide specific and actionable recommendations that can affect their retirement, including potential tradeoffs.

“Recordkeepers have an opportunity to build trust with these participants to help retain assets and win rollovers from them, either to an individual retirement account (IRA) or plan-to-plan,” says Elizabeth Chiffer, analyst. “Where possible, recordkeepers should provide or promote engagement with in-house experts who can help answer questions and guide decision making,” she concludes.