Glenn Dial of American Century Investments on Why Sponsors and Participants See Retirement Risks So Differently

A recent survey from American Century Investments reveals some surprising disconnects between retirement plan sponsors and the workers participating in their 401(k) plans. The findings uncovered some sizable gaps in how each group views participant preparedness, risk tolerance, and even the basic functionality of common retirement products.

To break down the results of the 12th Annual National Retirement Survey and shed light on what’s behind these disconnects, we welcome Glenn Dial, Senior Retirement Strategist at American Century Investments, who unpacks the data, challenges assumptions, and discusses what plan sponsors may be overlooking when it comes to participant needs and expectations.

Listen in as we explore employer-employee risk perceptions, barriers to retirement income adoption, misconceptions about TDFs, and what the survey says about income replacement, defaults, and protecting assets from market volatility.

Key Insights

Disconnect on Risk Tolerance
The survey uncovered a stark gap between participants and plan sponsors on acceptable downside risk near retirement. While nearly half of employees five years from retirement said they couldn’t tolerate more than a 10% drop in savings, over 75% of plan sponsors assumed participants could handle more. This misalignment suggests sponsors may overestimate participant resilience to market volatility, which could impact retirement outcomes.

Demand for Protected Retirement Income
The data revealed strong interest in protected income solutions. About two-thirds of participants want their entire account protected for generating guaranteed income, yet uptake has been slow due to past issues like portability and awareness. Flexibility and control also ranked as top participant priorities—most want to maintain full access to their savings, even after initiating income.

Target Date Fund Misperceptions
A troubling number of participants mistakenly believe target date funds (TDFs) provide guaranteed income or eliminate the risk of running out of money—61% and 34%, respectively. This confusion likely stems from sustained market growth, plan defaults into TDFs, and the assumption that “retirement plans” automatically imply income, highlighting the need for better education.

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Source: 12th Annual American Century Retirement Survey

Methodology: The participant survey was conducted between June 3, 2025, and June 23, 2025.  The survey included 1,500 full-time workers between the ages of 25 and 70 saving through their employer’s retirement plan. The data were weighted to reflect key demographics (gender, income, and education) among all American private sector participants between 25 and 70.

The sponsor survey was conducted between May 20, 2025, and June 16, 2025. Survey included 500 plan sponsor representatives holding a job title of Director or higher and having considerable influence when it comes to making decisions about their company’s retirement plan (either 401(k), 403(b), or 457 plans). The data were weighted to reflect the makeup of the total defined contribution population by plan asset size.

Percentages in the tables and charts may not total 100 due to rounding and/or missing categories.

Greenwald Research of Washington, D.C., completed data collection and analysis.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.