Employees are hungry for retirement guidance, but many don’t know where to turn for help. This disconnect between need and access has created a significant gap in retirement planning support, affecting millions of workers across the country.
A recent report from Cerulli Associates, cited in Employee Benefit News, sheds light on this troubling trend and reveals why plan sponsors and recordkeepers must step up their game. The research found that 63% of active 401(k) participants do not currently work with a financial adviser, yet more than half of these unadvised individuals rely primarily on their retirement plan provider for retirement and financial planning advice.
The numbers paint a revealing picture. While the average 401(k) balance across all participants was approximately $131,700 as of Q4 2024 (reflecting an 11% increase over the previous year), the median balance tells a more sobering story, hovering between $30,600 and $35,000. These balances vary widely across generational demographics. Even more concerning is the confidence gap among participants. Fewer than 30% feel very confident navigating topics like tax implications, withdrawal strategies, and long-term income needs—precisely the areas where expert guidance can make the biggest impact.
This lack of confidence isn’t just an abstract problem. It directly impacts retirement outcomes when employees make uninformed decisions or, worse, avoid making decisions altogether. For many workers, their employer-sponsored retirement plan serves as their primary (and sometimes only) financial tool, which makes access to financial guidance in the workplace even more important.
Elizabeth Chiffer, a research analyst at Cerulli, pointed to a clear path forward. “There is an opportunity for recordkeepers to establish themselves as a trusted adviser throughout the accumulation phase in order to retain and win assets,” she noted in a press release. The key lies in helping participants determine their optimal savings goals, target retirement dates, and overall vision for retirement.
The good news is that targeted interventions work. Behavioral nudges, like automatic contribution escalation and timely reminders about employer matches or catch-up contributions, have already helped raise the average employee deferral rate to over 14%, according to Cerulli. These successes demonstrate that employees respond well to guidance when it’s delivered at the right time and in the right way.
Plan sponsors can build on these wins by collaborating more closely with recordkeepers to integrate personalized support features. Simple tools that help employees set goals, track progress, and receive annual check-ins can significantly boost engagement. Timing matters too: Connecting retirement education to familiar touchpoints like open enrollment, salary increases, or major life events can help employees see how retirement planning fits into their broader financial picture.
Cerulli’s research also highlighted the value of making guidance more accessible through in-plan advice solutions, whether digital planning tools or direct adviser access. Chiffer recommended “developing personalized prompts for participants to reassess their goal, track progress on their goal, and update their information, at least annually” to drive engagement and prompt meaningful conversations.
For plan sponsors, this research underscores the importance of viewing retirement benefits as more than checking a box. When employees feel confident in their retirement planning, they’re more likely to participate meaningfully in their plans and achieve better outcomes. That’s a win for everyone—employees have the opportunity to attain greater financial security, while employers can offer a truly valuable benefit that helps attract and retain talent.
The solution requires more personalized guidance, better timing of educational touchpoints, and stronger partnerships between plan sponsors and service providers. By addressing these gaps now, we can help millions of workers move beyond minimal balances and toward genuinely secure retirements.
