With the new year quickly approaching, it’s a good time to think about some of the key trends to watch out for in 2025. Vanguard Head of Defined Contribution Research Jeff Clark—who is the author of the company’s popular “How America Saves” research—joins the 401(k) Specialist Podcast to talk about four 2025 retirement trends he anticipates will impact the workplace retirement plan market next year.
Clark covers growing Roth contribution options, increases in auto enrollment, why to expect a broader focus on financial wellness, and continued momentum for in-plan lifetime income options.
Key Insights
1. Growth in Roth Contributions:
Secure 2.0 provisions are driving a notable shift toward Roth 401(k) contributions. Starting January 2026, catch-up contributions for participants aged 50 and older who earn more than $145,000 will need to be made as Roth contributions. This mandate is expected to accelerate the adoption of Roth 401(k) offerings, with Vanguard predicting nearly universal availability by 2026, up from the current 82% of plans offering this option. Educational efforts around tax diversification and the benefits of Roth contributions are also gaining traction. The trend is particularly strong among younger and higher-income participants, with Roth contributions rising to 17% of participants in 2023, compared to 12% four years ago.
2. Automatic Enrollment Expansion:
Automatic enrollment in workplace retirement plans is on the rise, bolstered by Secure 2.0 mandates requiring new 401(k) plans to include this feature. As of 2023, nearly 60% of plans at Vanguard use automatic enrollment, with designs improving over time, such as defaulting participants at higher contribution rates. This trend is expected to grow further, as auto-enrollment has consistently proven effective in boosting participation and contributions.
3. Focus on Financial Wellness:
Employers are emphasizing financial wellness through initiatives like emergency savings accounts and student loan matching. These programs aim to address immediate financial needs while supporting long-term retirement readiness, making retirement plans more holistic.
SEE ALSO:
• How America Saves? At a Record Pace in 401(k), Vanguard Finds
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
