Participants in 401(k) plans, especially younger investors, are more likely to rely on their personal retirement accounts to fund their golden years than Social Security, according to a Cerulli report, released Thursday.
Just 5% of Gen Z and 16% of millennials surveyed by Cerulli said Social Security will be their primary source of retirement income, according to the latest “Cerulli Edge—The Americas Asset and Wealth Management Edition.”
This signifies that younger generations are “likely skeptical” about Social Security’s fiscal soundness and continued existence, Cerulli said.
The trend offers an “opportunity for recordkeepers to play a larger role in guiding participant decision-making,” according to the research firm.
Cerulli said its research showed that 58% of Gen Z and millennial 401(k) participants expected their personal retirement accounts to be their main source of retirement income, the firm said.
The report also said that 49% of all active 401(k) participants said they anticipate their personal retirement accounts as their primary source of retirement income.
Despite those data points, Cerulli said that many 401(k) participants were “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,” Cerulli said in a news release announcing the new report’s release.
“With fewer sources of guaranteed income available than previous generations, young retirement savers are personally responsible for securing a comfortable retirement for themselves,” Elizabeth Chiffer, Research Analyst, Retirement at Cerulli, told WSR by email.
“With fewer sources of guaranteed income available than previous generations, young retirement savers are personally responsible for securing a comfortable retirement for themselves.” — Elizabeth Chiffer, Research Analyst, Retirement, Cerulli
“Young 401(k) participants, though, face barriers to savings, including high living costs,” Chiffer pointed out, noting 27% of millennials who participated in the survey cited covering basic living expenses as a top source of financial stress.
But, she said, Gen Zers and millennials “should not give up on their savings goals in the face of these challenges; recordkeepers and advisors should step in to help them identify and prioritize their goals.”
Although many young investors might consult online resources or social media for financial information, they have high levels of trust in financial institutions, according to Chiffer.
Gen Z and millennial investors were most likely to rate financial advisors and their retirement plan providers as a “very trustworthy” source of financial information, Chiffer noted.
She added, “While Gen Z and Millennials are not the wealthiest cohorts today, they have time on their side when it comes to building wealth. Engaging these two groups early provides recordkeepers and advisors with an opportunity to become a trusted source of advice for when their wealth grows, putting them in a good position to retain and consolidate assets.”
Room For Improvement
Although some participants use recordkeeper retirement planning resources, there is significant room for improvement, according to Cerulli.
In 2024, 28% of survey participants said they had used their recordkeeper’s online saving tools and calculators in the past year, and 29% called their recordkeepers, according to Cerulli.
However, the firm said, “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 suggested that 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.”
“A significant majority of 401(k) plan participants either perceive value in financial advice or plan to engage an advisor as their retirement nears,” the report said.
“Those who work with a financial advisor report higher levels of confidence regarding their retirement outlook,” according to the report. “Plan sponsors are likely to benefit by finding ways to make financial advice available at scale.”
According to Cerulli, it conducted the survey of 1,590 401(k) investors in the first quarter of 2025, including 989 working current 401(k) account owners and 601 retired current or former 401(k) account owners.
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jeff.berman@wealthsolutionsreport.com.
