Retirement used to mean something simple: a gold watch, a farewell party, and a steady pension check until the end of your days. But for millions of Americans today, that vision feels like a relic of a bygone era. The retirement system in the United States is under enormous strain—and it’s not just retirees who should be concerned. This affects workers, businesses, policymakers, and families across every income level and generation.
As our population ages, costs rise, and traditional models collapse, it's time to face some hard truths—and start rethinking what retirement means in the 21st century. It's not all bad news; in fact, with smart reforms and bold innovation, we have an opportunity to build a retirement system that is more inclusive, more flexible, and better suited to the diverse lives people actually live.
The Cracks in the System: What's Going Wrong?
Let’s start with the facts. A quarter of U.S. adults have no retirement savings. Just 36% feel that their retirement planning is on track. And the median savings for those aged 55–64—the age group just about to retire—is around $120,000. Over a 15-year retirement span, that adds up to less than $1,000 per month.
Now layer in rising healthcare costs, longer life expectancy, and inflation—and it becomes painfully clear that the current system isn’t working for the vast majority of people.
Much of this stems from a massive shift in how Americans save for retirement. Gone are the days of dependable pensions. Today, more than 60% of retirement assets are held in defined contribution plans like 401(k)s. This shift has pushed the investment risk from employers onto employees—many of whom have little financial literacy and are left to navigate their futures without guidance.
The Fee Pressure Squeeze
Retirement providers themselves are under pressure. As expense ratios for 401(k)s and administrative fees continue to fall, many firms find their margins shrinking. Between 2015 and 2019, recordkeeping fees alone declined by 8%. With competition fierce and tech disruption rampant, firms are being pushed to consolidate or exit the market altogether.
That’s not necessarily a bad thing—unless it results in fewer services, less innovation, or even more barriers for the people who need these services most.
Who’s Being Left Behind?
Nearly half of the U.S. workforce—about 63 million people—don’t have access to employer-sponsored retirement plans. Of those who do have access, a large portion still chooses not to participate. Why? The reasons vary: low income, debt burdens, family responsibilities, lack of trust in financial institutions, and an absence of financial literacy or wellness programs.
Not surprisingly, women, gig workers, people of color, and small business employees are among those most affected by this access gap.
Rethinking the Framework: Four Paths to Real Reform
If retirement providers and policymakers want to fix this system—and unlock as much as $5 trillion in new retirement assets—they’ll need to think radically different. According to emerging data, there are four major strategies that offer real potential.
1. Adapt to Changing Participant Needs
People no longer follow the same linear career paths. Some want to retire early, others want phased retirement, and some want to start encore careers in their 60s. Firms must adapt to these varying paths.
• Debt integration: Combine retirement plans with student loan repayment programs to engage younger workers. • Guaranteed income products: Add options like in-plan annuities to help retirees stretch their dollars over time. • Financial wellness tools: Move beyond basic education and toward personalized digital advice, coaching, and support for real-life scenarios. • Pooled Employer Plans (PEPs): These allow unrelated employers to band together to offer retirement plans, significantly lowering costs and extending access.
2. Diversify Revenue Sources
The most successful firms won’t just offer retirement accounts. They’ll expand into a broader ecosystem of financial, health, and wellness benefits—what some are calling the “cradle-to-grave” model.
From debt reduction programs to emergency savings plans to elder care support, the next generation of benefit providers will offer holistic services that evolve with each stage of life. This approach not only adds value for consumers—it helps firms retain assets and maintain long-term client relationships.
3. Prepare for Market Realities
The retirement industry isn’t just under pressure—it’s transforming. Legacy recordkeeping systems are costly and outdated. Consolidation is increasing. Commoditization is a real threat. To compete, providers must:
• Embrace automation to drive down costs • Invest in digital operations to improve customer service • Reevaluate participation in saturated segments and look for niche opportunities
4. Digitize the Experience
From robo-advisors to mobile-first apps, technology is revolutionizing retirement planning. And the winners will be those who can offer a high-tech, high-touch experience that combines personalization, efficiency, and human empathy.
Consumer expectations have changed—people want fast answers, intuitive tools, and proactive alerts. Embedding retirement planning into people’s everyday routines is crucial for long-term engagement.
The Role of Government and Policy
Federal reforms like the SECURE Act of 2019 and its follow-ups have helped expand access to plans like PEPs and Multiple Employer Plans (MEPs). But more can be done:
• Mandating auto-enrollment in retirement plans for all workers • Offering tax incentives for small businesses to offer plans • Promoting public-private partnerships to educate workers • Creating new protections around decumulation and drawdown options
A retooled retirement system will require not just private innovation but public support and smart legislation.
Reframing Retirement Itself
Retirement is no longer just a destination—it’s a transition. People are living longer, working longer, and craving more flexibility in how they age. For some, it means full retirement at 65. For others, it may mean part-time work, freelancing, or even launching a business.
The future of retirement must reflect these diverse needs. Retirement planning should not be about reaching an arbitrary date—it should be about reaching a state of financial peace and life purpose, however that looks for each individual.
Closing Thoughts: From Breakdown to Breakthrough
We stand at a crossroads. The current retirement system is broken—but not beyond repair. If we act now, with courage and creativity, we can build a future where every American—no matter their job, income, or background—has a path to retire with dignity.
That path will require rethinking outdated models, retooling our services, and reinvesting in what truly matters: people. Because retirement isn’t just a financial challenge—it’s a human one.
The journey to financial peace of mind shouldn’t be reserved for the lucky few. It should be accessible to all.
And with the right tools, policies, and partnerships in place, it can be.