Retirement Trends: What You Need To Know in 2025

As the workforce evolves, so do retirement needs. Employees are living longer, working longer, and facing greater financial complexity than ever before. For businesses, this means adapting retirement plans to keep pace with the shifting retirement trends.

In 2025, the most forward-thinking companies are responding by shaping company retirement plans to address the comprehensive retirement needs of every employee.

Employers are looking at retirement planning not just as a benefit but as a critical part of overall financial wellness — helping employees secure their futures while strengthening retention and productivity.

12 Emerging Retirement Plan Industry Trends

Companies are being strategic about emerging trends in the retirement industry. Whether encouraging workers to save more for retirement or enhancing employees' overall financial wellness, companies are doing more with their retirement plans.

Here are 12 trends reflecting the future of retirement to keep an eye on in 2025.

1. Improved Service, Auto-Enrollment, and Self-Service Tools

Employers are going beyond focusing on fees when selecting retirement plans. They're also considering services available to support 401(k) plans and administration, like digital tools and robo-advisors to help plan participants manage their investments and self-service tools that improve access to plan information.

There's also a trend of more companies turning to auto-enrolling their employees to ensure that they're taking advantage of the company 401(k) plan.

2. Promoting the Benefits of HSAs

Health savings accounts (HSAs) are becoming an essential part of retirement planning. Given the steady rise in healthcare premiums—the average family premium increased 47% from 2013 to 2023—employees must prepare for medical costs that will increase as they age.¹ HSAs help account holders and their families save money for present healthcare needs and health costs after retirement.

Consider the fact that 30% of retirees said that a health problem was a factor in their decision to retire, according to findings from the Federal Reserve. Health problems, caring for family, and lack of work collectively contributed to the timing of retirement for 46% of retirees.

For employers contending with rising healthcare costs, an HSA paired with a high-deductible health plan could be a cost-effective option to help employees stretch their medical dollars.

Those who stay healthy or use non-HSA funds to pay out-of-pocket medical costs can allow savings to build up in their accounts on a tax-deferred basis. Once the account owner reaches age 65, distributions can be taken for any reason without a tax penalty. Of course, distributions other than for qualified medical expenses are taxable to the same extent as those from an IRA funded with fully deductible contributions.

3. Enhanced Financial Education for Participants

A sizable percentage of Americans are not saving enough to maintain their standard of living during their retirement years and the problem is only getting worse for younger generations. The Federal Reserve found that nearly a third of non-retired adults in the U.S. do not have any retirement savings, and the median total of retirement assets for those who do is less than $100,000.

Given these stark statistics, you may want to consider offering your employees financial education as part of a retirement plan to help bridge this gap. According to the 2023 Paychex Pulse of HR Survey, financial counseling was even cited as an additional benefit HR leaders planned to offer within the next 12 months.

Resources such as financial counseling, online budgeting tools, and access to professional advice can help employees assess their financial readiness and better prepare for retirement.

4. Offering Retirement Plans as a Part of Overall Financial Wellness Benefits

Financial well-being is more than just saving for retirement. It's about managing day-to-day expenses, debt, and healthcare costs. The rise in inflation and overall uncertainty about where the economy is headed means you may have employees more stressed about money than ever before. Business leaders are feeling the pressure, too: 86% of them cited economic uncertainty as a high-impact business challenge, according to our 2025 Priorities for Business Leaders survey.

The Federal Reserve reported that financial well-being declined, and 35% of those surveyed said they were worse off than the previous year. In comparison, only 31% of non-retirees thought their retirement plan was on track — down 9% from the previous year.

As an employer, you may even see firsthand the impact that stress from financial issues can have on your employees. It could even lead to turnover, absenteeism, and loss of productivity. A lack of economic knowledge can hold anyone back. Left with few reliable resources like where to find information and get financial questions answered, your employees will likely continue to need help.

Employers who integrate retirement plans into a broader financial wellness program can help their employees feel more confident and prepared for the future, combat stresses around money matters, and feel more hopeful for the future.

Financial wellness programs may include personal financial coaching on specific topics, online education, budgeting tools, credit resources, and guidance on the best places to start investing based on age and goals.

5. Stronger Auto-Portability for 401(k) Plans

Auto-portability, an optional employer 401(k) plan feature that automatically transfers small-balance retirement savings when participants change jobs, has become increasingly popular.

As one of the more exciting emerging retirement plan industry trends, auto-portability aims to address a common source of 401(k) account leakage. It provides a seamless, automated plan-to-plan retirement savings direct transfer when a person moves from one employer to another.

A 401(k) is supposed to help an employee save for retirement and often represents a sizable portion of their assets. That nest egg is vulnerable to leakage when a person takes out a loan and does not pay it back on time, takes hardship withdrawals, or does not roll their 401(k) to an IRA retirement savings plan when they leave one company and go to another.

As more companies adopt this feature, it's becoming vital to retirement plan design. It eliminates the risk of forgotten accounts or premature cashouts and helps ensure employees' savings remain intact throughout their careers.

6. Socially Responsible Investing

Socially responsible investing (SRI) is gaining traction as employees, particularly Millennials and Gen Z, as many individuals in these generational groups seek to align their investments with their values. These employees are not only looking for healthy financial returns but also want to invest in companies that prioritize environmental, social, and governance (ESG) factors.

Socially responsible investing entails choosing investments based on financial return and social/environmental responsibility — or weeding out companies viewed as socially or environmentally irresponsible. Many mutual funds and exchange-traded funds (ETFs) now focus on holding only socially responsible investments.

Offering socially responsible investment options can help employers attract and engage employees who care deeply about the impact of their investments.

7. Older Americans Working Longer Means Fewer "Traditional" Retirements

The average retirement age is increasing, meaning older Americans are working past the typical retirement age. Some older employees are choosing to stay in the workforce due to financial need or personal fulfillment in their work, while others need to keep health insurance benefits or continue earning income to supplement their retirement savings. As a result, many expect to retire later than ever.

Fears of not having enough savings and being unable to rely on Social Security benefits make it increasingly common to find older workers easing into retirement by shifting into other forms of part-time work, such as consulting or a less time-intensive job.

This trend has significant implications for employers. Companies may see long-term effects manifest through pressure for higher pay, labor shortages, and (further down the road) potential Social Security funding problems.

Employers taking note of this retirement plan trend are seeing the benefit of offering more comprehensive financial wellness benefits, educational programs, and savings opportunities to help employees tailor their retirement planning and meet their goals.

8. Continued Uncertainty About the Future of Social Security Benefits

With projections suggesting that Social Security funds could be depleted by 2033, and that the SSA will not be able to pay out more than 79% of earned benefits beyond then, one of the most questioned developments in retirement is the availability of Social Security benefits.

Uncertain as to whether they can rely on federal benefit programs by the time they retire, employers and workers in the U.S. continue to keep a close eye on the state of Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds.

It's all the more reason employers offer a retirement plan and encourage employees of all ages to participate. By providing 401(k) plans, matching contributions, and financial education, companies can help employees take control of their retirement futures — encouraging savings at all stages of their careers and reducing their reliance on Social Security benefits alone.

9. Growth of AI and Digital Tools in Retirement Planning

Artificial intelligence (AI) is transforming how small and medium-sized businesses can offer retirement planning. With AI-assisted platforms, employers may be able to offer tailored retirement advice without needing specialized expertise in-house.

AI-assisted tools may be able to analyze employee data and market trends to offer customized retirement advice. This can help employees make decisions about their savings and investments and take a more active role in their financial futures. Employers and HR departments may also benefit from automated plan management, including enrollment and participant engagement.

10. Expanded Catch-Up Contributions for Older Workers

The Setting Every Community Up for Retirement Enhancement (SECURE) Act, first enacted in 2019, introduced significant changes to the retirement landscape. The SECURE 2.0 Act, passed in late 2022, continues to build on those reforms. For instance, if you have employees nearing retirement age, SECURE 2.0 changes catch-up contribution limits. Beginning in 2025, employees aged 60 to 63 can make catch-up contributions up to 150% of the regular catch-up contribution limit to their retirement plans. This adjustment will be indexed for inflation starting in 2026, giving older workers a valuable opportunity to shore up their savings as they approach retirement.

Additionally, for employees earning more than $145,000 in the prior calendar year, all catch-up contributions at age 50 or older must be made on a Roth account in after-tax dollars. This requirement was initially slated to begin in 2024 but was postponed to 2026 due to implementation delays.

Employers should be prepared to update their retirement plans accordingly and communicate these changes to help employees take full advantage of their retirement options.

11. Longevity and Financial Preparedness in Retirement Planning

Longer life expectancies mean that employees must plan for a retirement that could last 25 years or more, which has important implications for employers. This highlights the importance of financial tools like annuities or lifetime income products, which can help retirees manage the risk of outliving their savings.

Incorporating these options into your employer retirement program adds value by addressing a critical need for your employees to have financial security in later life. It can also strengthen your company's retirement benefits package, making it more attractive and comprehensive.

12. Expanding Retirement Plan Access for Gig Workers and Small Businesses

Small businesses and gig workers have historically had limited access to retirement savings options.

State-mandated retirement programs and Pooled Employer Plans (PEPs) are making it easier for employers to support workers in saving for the future. PEPs, which allow multiple employers to pool resources and offer a retirement plan with reduced administrative burdens and fiduciary risks, are becoming increasingly popular for small businesses. Together, these developments ensure that a broader range of workers, including freelancers and contractors, can build retirement savings.

Retirement Laws and Regulatory Changes Impacting Retirement Plans in 2025

Retirement laws offer new and expanded opportunities for plan participants and plan sponsors. As we move into 2025, employers must stay updated on the latest regulatory changes to ensure plan compliance and maximize the benefits available to their workforce. Some of the notable laws and regulations impacting the retirement industry include:

SECURE 2.0 Act Updates for 2025

The SECURE Act incentivizes employers to offer retirement plans for employees. A business that starts a new retirement plan may qualify for up to a $5,000 tax credit for three years. An additional tax credit of $500 is available for those who include an auto-enrollment feature or convert their plans to auto-enrollment.

One of the SECURE 2.0 provisions includes the employer contribution tax credit, which is up to $1,000 per year per employee with employer contributions for businesses with 50 or fewer employees. The additional employer contribution tax credit is reduced for employers with 51-100 employees. SECURE 2.0 also increased the age at which required minimum distributions (RMDs) must begin. RMDs were previously required starting at age 72, but it was pushed to age 73 as of January 1, 2023.

However, starting January 1, 2025, additional SECURE 2.0 changes are taking effect. New catch-up contribution limits for retirement plans are being implemented for workers aged 60 to 63 who can make larger catch-up contributions — the greater of $10,000 or 50% more than the regular catch-up contribution amount for that year. This limit will be adjusted for inflation starting in 2026 to keep pace with rising costs, so keep your retirement plan documentation up to date and inform employees of changes as they occur.

SECURE 2.0 also emphasizes automatic enrollment and contribution escalation to improve employee participation in retirement savings plans. As of 2025, most employers offering a retirement plan must automatically enroll eligible employees with a contribution rate between 3% and 10% of their salary unless employees choose a different enrollment rate or opt out of participating in the program altogether.

Employers should also consider the expanded eligibility for long-term part-time employees. Beginning January 1, 2025, long-term part-time employees with two consecutive years of service (along with 500 hours of work each year and reaching age 21) must be allowed to take part in their employer's workplace retirement plan. The prior SECURE Act required 3 consecutive years of service for long-term part-time employees to be eligible.

In addition to these updates, businesses should continue monitoring regulatory guidance on other provisions of SECURE 2.0, notably student loan matching contributions and the infrastructure to support several new distribution types permitted under the law, particularly emergency distributions and distributions to victims of domestic abuse.

Pooled Employer Plans

Another provision of the SECURE Act enables multiple businesses of any size to pool assets into a 401(k) plan professionally administered by a third party. These Pooled Employer Plans (PEP) simplify administration, enrollment, and help reduce participating employers' fiduciary liability.

A PEP can be a practical and cost-effective solution for smaller businesses that want to provide a competitive retirement plan without the complexity. The pooled plan provider handles most of the administrative tasks, which can simplify compliance, reduce the fiduciary risks for the employer, and help businesses focus on their core operations.

State-Mandated Retirement Programs

Most states have enacted laws to mandate workplace retirement plans at the state level. Nine states – Hawaii, Minnesota, Missouri, Nevada, New Mexico, New York, and Rhode Island, Vermont, and Washington – have legislation in place and are expected to roll out retirement programs that require employers to offer plans or enroll employees in state-facilitated options, while 13 have already implemented their programs:

• California
• Colorado
• Connecticut
• Delaware
• Illinois
• Maine
• Maryland
• Massachusetts
• New Jersey
• Oregon
• Virginia

As of October 2024, South Dakota and Alabama are the only 2 states that have never considered legislation for retirement savings programs.

While some state retirement savings programs may be "mandatory," employers can adopt a qualified retirement plan that exempts them from participating in the state’s program.

Stay Current on Retirement Trends With Paychex

Many changes, trends, and possibilities surround the retirement landscape for employers and workers at every stage of a career life cycle. Staying on top of retirement industry trends and ensuring employees are confident about their finances is possible with Paychex, which offers 401(k) and retirement services customized to employers' needs while also providing a high level of expertise and service.

¹ KFF, 2023 Employer Health Benefits Survey. https://www.kff.org/report-section/ehbs-2023-section-1-cost-of-health-insurance/