Younger Generations Losing Faith in Social Security, Turning to 401(k)s for Retirement: Study 

Only 5% of Generation Z and 16% of Millennials say Social Security will be their primary source of income in retirement—an unmistakable signal that younger generations harbor deep skepticism about the program’s fiscal sustainability and long-term viability. According to the latest Cerulli Edge—The Americas Asset and Wealth Management Edition, younger workers are increasingly relying on personal retirement accounts and defined contribution plans, a shift that places recordkeepers at the center of a major generational transition in retirement planning. 

Cerulli’s research found that 58% of Gen Z and Millennial 401(k) participants expect their personal retirement accounts to be their main income source in retirement, compared with 49% of all active 401(k) participants. The trend underscores both a growing confidence in self-directed retirement savings and a declining reliance on government programs among younger cohorts. 

Despite the encouraging ownership of savings accounts, many participants remain disengaged from actively managing their retirement portfolios. The report noted that while automatic enrollment and default investments have expanded participation rates, they’ve also reinforced a “set it and forget it” mindset, with limited ongoing involvement or planning by participants. 

Cerulli’s survey shows that in 2024, only 28% of 401(k) participants used their recordkeeper’s online savings tools or calculators, and 29% contacted their recordkeeper by phone—though very few did so for retirement planning purposes. Just 12% of participants called specifically to assess retirement readiness or develop an income strategy, while most calls focused on administrative or technical matters such as changing investments, understanding fees, or transferring funds. 

The findings point to a significant education and engagement gap that recordkeepers can help close. Cerulli recommends that recordkeepers enhance digital planning tools, enable participants to set and adjust personalized retirement goals, and offer actionable, scenario-based guidance that connects investment behavior with long-term outcomes. 

“Recordkeepers have an opportunity to build trust with these participants to help retain assets and win rollovers from them, either to an IRA or plan-to-plan,” said Elizabeth Chiffer, analyst at Cerulli. “Where possible, recordkeepers should provide or promote engagement with in-house experts who can help answer questions and guide decision-making.”