Retirement plan advisors are much more aligned with participants than plan sponsors when it comes to views on retirement readiness, according to new findings from Voya Investment Management’s 2025 Survey of the retirement landscape, released today.
“Sponsors have generally felt that participants are better prepared for retirement than specialists have.”
Brian Houston, Voya IM
While participants are feeling more optimistic regarding their retirement, as in 2023, the report shows plan sponsors continued to overestimate participants’ sense of their retirement readiness. 91% of sponsors thought participants were either “very” or “somewhat” prepared, but only 69% of participants felt that way. Retirement plan advisors, on the other hand, held views significantly more in line with participants, with 70% saying that participants are “very” or “somewhat” prepared (versus 71% in 2023).
“This level of confidence from sponsors isn’t unusual,” said Brian Houston, senior vice president, Business Development Manager, DCIO, Voya IM. “Sponsors have generally felt that participants are better prepared for retirement than specialists have.”
One of the many factors driving this optimism, Houston added, may be the long-running equity bull market. “However, it’s crucial that participants are properly invested and have appropriate asset allocation, especially in a volatile market environment. Both sponsors and specialists agree on this point, and it’s a key focus for helping participants achieve their retirement goals,” Houston said.
The good news, the report notes, is that participant confidence in their retirement readiness has increased since the 2023 study, jumping to 69% from 63%.
As in 2023, plan sponsors and 401(k) specialists continued to have generally similar views on the most challenging barriers to participant retirement readiness.
Both groups agreed the top barrier is insufficient participant contributions to the plan. Sponsors cited participants taking loans, hardship withdrawals or other types of withdrawals as the second most important barrier, while 401(k) specialists ranked participants not knowing how much they’ll need in retirement in that position.
Compared to the previous survey, this year’s sponsor and specialist responses showed greater alignment on key barriers to retirement readiness. Both groups highlighted a lack of understanding and support for retirement income generation, as well as participant investment strategies that are either overly aggressive or too conservative.
The report, titled, “Challenges and Opportunities for Defined Contribution (DC) Specialists,” offers insights into the evolving perceptions and practices of those who advise, sponsor and benefit from employer-sponsored retirement savings programs.
Growing interest in lifetime income solutions
The new survey also highlights a growing interest among sponsors and participants in solutions for generating income in retirement, signaling a shift toward more outcome-oriented retirement planning.
While 401(k) specialists were more likely to believe that plan sponsors prioritize investment selection and monitoring, sponsors place a higher value on guidance among retirement income options, ranking it considerably higher than what 401(k) specialists perceived. Plan sponsors actually cited guidance on retirement income investment options as the top service they want from their plan advisor, and 77% identified adding a retirement income solution or product as an important area of focus in the next two years.
According to 83% of plan sponsors, the SECURE Act of 2019 and the SECURE 2.0 Act of 2022 have encouraged a strong focus on retirement income. Nine out of 10 sponsors agreed that there has been greater focus on the need for retirement income solutions in DC plans due to an aging participant base. This sentiment was even stronger among sponsors of larger plans.
Sponsors and 401(k) specialists were fairly aligned in their opinions on how to structure the plan’s investment menu. 91% of sponsors and 88% of specialists agreed that offering a tiered investment menu— i.e., TDFs, core funds, and a self-directed brokerage/mutual fund window—for different types of participants can result in a better investing experience.
One area of variance between sponsors and specialists centered around the number of investment options in the plan. 70% of sponsors said offering too many choices could inhibit effective participant investment decisions (down from 82% in 2023), while specialists’ views on this remained stable since the previous survey (88%).
The report also showed that target date funds (TDFs) remain a staple, with both advisors and plan sponsors continuing to see TDFs as key components of DC plans. Three in four advisors include them in the plans they advise, while three in five sponsors have them in their plan. Of the sponsors who don’t, nearly half would like to in the future.
Another finding was that the percentage of participants that are caregivers and those with special needs are underestimated. Both 401(k) specialists and plan sponsors recognized the importance of addressing the specific financial needs of caregivers. But more than 80% of both groups estimated that caregivers made up less than 20% of plan participants when, according to AARP data, the real number is likely far higher based on the incidence of caregiving in the general population.
Opportunities for specialists
“We see a significant opportunity for DC specialists to lead in the delivery of products such as TDFs or retirement income products,” said Houston. “Our data show strong alignment between sponsors and specialists on the importance of supporting participants’ holistic financial well-being. This opens the door for specialists to provide targeted education and personalized messaging—especially around guidance on retirement income investing options, which sponsors ranked as their top priority.”
Voya’s survey also showed that 401(k) specialists were more likely to indicate they always or usually recommend or discuss plan features with plan sponsors than sponsors perceived, suggesting an opportunity for specialists to strengthen their communication skills especially when conveying their value/expertise.
Sponsor and specialist views on the goals of financial wellness programs were generally well aligned. Sponsors identified helping participants with holistic financial wellness as an important area of focus, which presents an excellent opportunity for 401(k) specialists to assist.
About the study
This is the fifth edition of Voya Investment Management’s survey of the retirement landscape, with previous waves conducted in March 2023, March 2021, December 2018, and April 2016. The study distinguishes specialists by type: heavy-focus DC specialists, whose practices emphasize plan sponsor clients, and emerging DC specialists, for whom plan sponsors represent a smaller proportion of business. The study also segments sponsors based on plan size: $1-5 million, $5-25 million, and over $25 million.
The online survey of retirement plan sponsors and DC specialists was conducted from mid-January to mid-February 2025. As in 2023, it also included contributing participants in the survey to better understand their perspectives on issues such as retirement readiness, investing, and financial confidence.
Check out the 2025 Survey of the retirement landscape here.
SEE ALSO:
• Uptick in Retirement Optimism Might Not Be Realistic
• Why 401(k)s Can’t be ‘One-Size-Fits-All’ Anymore
• Voya Debuts Fund Expansion Within Advisor Managed Accounts Program
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.