SECURE 3.0

Another SECURE Act is in the works in Congress — and is likely to move forward, since bipartisan majorities ensured passage of SECURE 2.0 in 2022. It’s likely SECURE 3.0 will have a continued focus on legislative efforts to allow employees more flexibility as they plan for retirement, as well as a greater emphasis on portability for workers, to make it easier for the assets to automatically follow people around as they go from employer to employer or move assets from employer to IRA. Also, there could be added enhanced benefits for older workers.

In-plan retirement income solutions

Demand for in-plan lifetime income solutions, which offer a way for retirees to receive income directly from their 401(k)s, is getting stronger as pension plans continue to be phased out for employees. To further solidify this strong trend, two new in-plan income funds launched in 2024 — T. Rowe Price’s Managed Lifetime Income and BlackRock’s LifePath Paycheck, which gives employees access to guaranteed income through a target date fund, allowing DC plans to switch some of an enrollee’s investments into an annuity at age 55.

There will be increased focus on income features in 2025, as plan sponsors evaluate and select retirement income solutions within their 401(k)s. However, most employers understand the basics of annuities but need help getting conversational about them with employees. Now, the Plan Sponsor Council of America is offering some insight, with an online education program for plan sponsors that provides a thorough overview of retirement income options. 

The ‘missing plan participant’ problem

Tracking down employees who leave the company and distributing their retirement plan balances is a burden for plan sponsors. Some plans allow employees to keep their money in the plan regardless of the balance, and others force participants to move their money out of the plan, perhaps at different thresholds.
However, tracking down these “missing participants“ can be a challenge, and drain time and resources, but it’s a plan sponsor’s fiduciary duty to do so. In 2024, the Department of Labor came to the rescue with a Retirement Savings Lost and Found Database. Over time, the DOL’s database, which is not yet a comprehensive tool, has the potential to grow coverage. Legislative support will be a key driver.

Also, the database, which is a great start, is also only expected to cover adults over the age of 65 at the point of launch, according to the PSCA. That means many younger workers who could benefit from the database will be left out for now. So more work is needed to find those missing plan participants.  

State auto-IRA plans

Public retirement savings programs are having a moment, with state 401(k) plans on the rise. These automatic retirement savings programs, which are designed and administered by a state government, offer an affordable investment program for smaller companies that don’t offer a retirement plan to employees.

There are now 22 (20 states and 2 cities) retirement savings programs for private-sector workers. In 2024, New Jersey, Rhode Island, Delaware, Vermont (which launches next month) and Washington (which is set to launch in 2027) announced programs, and more are expected this year.

The federal government is also taking the lead in this auto retirement trend. In 2025, under SECURE 2.0, employers instituting new 401(k)s and 403(b)s are now required to automatically enroll workers. The House also introduced a bill last year that would require firms with 10+ employees to automatically enroll employees in an automatic IRA or 401(k).

Financial literacy

Financial knowledge does not always lead to action, especially when it comes to personal finance. While a majority of Americans consider themselves financially literate, their use of basic financial accounts, particularly retirement, severely lags behind, numerous studies have shown.

Related: 2024 retirement planning insights: How advisors, plan sponsors can put them into action in 2025

Watch for more focus on financial literacy in 2025 to help Americans be better able to focus on retirement savings. Now, more than half of all states require high school students to take a personal finance class before graduation, and more personal finance courses are sprouting up at universities nationwide.

Many Americans also turn to fragmented financial information online, leading to gaps in critical areas like budgeting, investing, and planning for future goals. T. Rowe Price's newly launched “Confident Conversations on Retirement” podcast, which offers investors knowledge and insight they need to navigate the ever-changing retirement landscape, is a step in the right direction.

Yes, more and more employers have stepped up and have been offering financial wellness programs over the last year or so, but much more work needs to be done. Programs need to be more comprehensive and more personalized to be effective, most financial experts say.