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By thoughtfully integrating private assets into target date solutions, participants could see about a 15% boost in their 401(k) savings over 40 years.1
Broadening access to private assets isn’t new — pensions have long held them as a core part of their portfolios, helping them outperform 401(k)s.2 We believe defined contribution plans deserve the same opportunity.
We estimate adding a strategic allocation of private assets could increase returns by an incremental 50 basis points each year.
Roughly 85 million Americans rely on defined contribution (DC) plans like 401(k)s to save for retirement. For many, it’s their first—and only—experience with investing. The stakes are high to help participants retire on their own terms.
As more private sector employers have shifted from defined benefit (DB) pension plans to DC plans, saving for retirement has become the individual’s responsibility — but without access to the same investment opportunities available to institutional investors.
The good news? The retirement industry and its allies are responding: The Secure 2.0 Act bolstered automatic enrollments in DC plans and expanded emergency-savings programs, while employers now have options to access a wide range of guaranteed income solutions.
DC plans have come a long way, but one powerful lever remains out of reach for most savers: private assets. DB plans have long used private assets—allocating about 16% on average3—which helps them typically outperform 401(k)s by roughly 50bps a year.4 As access grows for U.S. wealth investors and retirement plans outside of the U.S., we believe it’s time DC participants get the same opportunity.
More than thirty years ago, we transformed retirement by pioneering the target date fund. Today, we see opportunity to help millions of Americans improve their retirement outcomes by offering access to private assets in DC plans.
We regularly engage with and learn from our clients to understand their changing needs – and we evolve our business and offerings in service of them. Helping people achieve better retirement outcomes is our core business: more than half the money we manage is retirement money.
Private assets have seen strong growth in recent years - and BlackRock estimates that private market opportunities can grow by more than two-thirds by 2029, reaching $23 trillion.5
We anticipate private assets will continue to outperform public assets over the coming decade, and our research suggests that including them within a target date solution can offer a host of benefits for retirement savers: better risk-adjusted returns, diversification, stable cash flows and inflation protection.
Leveraging BlackRock Investment Institute’s capital market assumptions and Preqin data, we estimate that adding private equity and credit to DC plans through a target date solution could boost annual returns by about 50 basis points. Over 40 years, that modest lift compounds into about a 15% increase in 401(k) savings.6
So what do we propose? We envision a retirement plan option that thoughtfully integrates private assets into target date strategies – the most common default option in DC plans – through purpose-built exposures.
This does not mean simply ‘bolting-on’ an existing stand-alone private asset fund to a portfolio of public securities. Rather, we’d consider the benefits and risks of private assets at every stage of the investor lifecycle, as well as the ways in which private assets interact with public ones. Our approach to this choice would make small but growing allocations to private assets when investors are younger and then decreasing them as they near retirement.
Private assets have long been regarded as the ‘black box’ of investing—less liquid, harder to see into and often more expensive to access. But as they step into the spotlight of mainstream portfolios, we’re innovating to crack that box open—bringing greater transparency, smarter pricing and broader access than ever before.
While we see a significant opportunity to create better retirement outcomes for millions, we also recognize that the plan must operate in accordance with legal and regulatory requirements and act in the best interest of plan participants. As such, we recognize there are questions around adding private assets to DC plans, including liquidity, fees and transparency, and are focused on ensuring processes meet the high standards under applicable legal requirements. There are many practical considerations to resolve and the fiduciary responsibility is significant.
With product design that keeps DC-friendly characteristics top of mind (competitive fees, transparency), along with more education, our proposal seeks to minimize private asset-related concerns that may arise with this kind of choice:
We believe demand for the option to include private assets in retirement portfolios will only continue to grow. In a recent survey of DC plan advisors, 21% said they plan to add private market investments to the plans they manage. And when asked how they’d like to deliver those investments, target date strategies came out as the top.7
‘Choice’ is a critical word here. We see the choice to include private assets in retirement plans as an important part of our broader efforts to bring the full power of capital markets to all investors.
Dive deeper into how we’re approaching integrating private assets into a target date solution’s glidepath—and how we’re addressing the questions retirement plan professionals care about most.
We believe embedding private market assets in a target date solution should be an option – one that satisfies our clients’ changing needs as we evolve our business and offerings in service of them.
Private market investments encompass a broad range of asset classes, including private equity, private credit, infrastructure and real estate, all of which are not traded on public exchanges. These investments offer potential for higher returns but come with less liquidity and a longer lock-in period.
Incorporating private equity and private credit into defined contribution (DC) plans through a target date solution can potentially generate about 15% more money in a participant’s 401(k) account over 40 years, boosting overall investment performance.
The BlackRock Investment Institute (BII) is a research and insights team within BlackRock. The BII provides insights on a range of topics, including macroeconomics, sustainable investing, geopolitics, and portfolio construction, to help BlackRock’s portfolio managers and clients navigate financial markets.
Discover how U.S. wealth advisors can leverage private markets in 2025 to enhance client portfolios and drive long-term value creation.
Explore our latest thinking on why we believe more people should have the option to access private assets in their DC plans.
1. The 50bp average annual uplift and 15% higher account balance are derived using the BlackRock Investment Institute’s capital market assumptions (“CMAs”) for private credit (direct lending) and US private equity (buyout). The CMAs used are estimated over a 5- 30-year investment horizon, allowing for flexibility in portfolio construction and scenario analysis, and assume a 10% return for private credit, 11% for private equity, 5% for public fixed income and 8% for public equities. A 10%-20% average reallocation from public to private, blended across private equity and private credit, is estimated to provide an uplift of approximately 50bp, averaged across target date vintages. Expected returns and risks are forward-looking projections that should not be relied upon when making an investment decision. Such projections do not reflect actual performance and cannot account for the impact that economic, market and other factors may have on the implementation of an actual investment program, nor do they consider the impact of trading decisions, liquidity constraints, fees, taxes and other factors on future returns. No representation is made that any proposed or future strategy will achieve the expected return or its investment objective. Actual returns may be higher or lower than the expected return. Source: BlackRock. For illustrative purposes only. Allocations are subject to change.
2. BlackRock, Alternative investments in target date funds, (2025).
3. Public Plans Database, accessible online here. 16% asset allocation to private assets includes 14% to private equity and 1.9% to misc. alternatives, as of 2023.
4. BlackRock, Alternative investments in target date funds (2025).
5. Preqin data as of Q3 2024, as published in ‘Future of Alternatives 2029’ in June 2025. Private equity is inclusive of venture capital. There is no guarantee that any forecasts made will come to pass.
6. The 50bp average annual uplift and 15% higher account balance are derived using the BlackRock Investment Institute’s capital market assumptions (“CMAs”) for private credit (direct lending) and US private equity (buyout). The CMAs used are estimated over a 5- 30-year investment horizon, allowing for flexibility in portfolio construction and scenario analysis, and assume a 10% return for private credit, 11% for private equity, 5% for public fixed income and 8% for public equities. A 10%-20% average reallocation from public to private, blended across private equity and private credit, is estimated to provide an uplift of approximately 50bp, averaged across target date vintages. Expected returns and risks are forward-looking projections that should not be relied upon when making an investment decision. Such projections do not reflect actual performance and cannot account for the impact that economic, market and other factors may have on the implementation of an actual investment program, nor do they consider the impact of trading decisions, liquidity constraints, fees, taxes and other factors on future returns. No representation is made that any proposed or future strategy will achieve the expected return or its investment objective. Actual returns may be higher or lower than the expected return. Source: BlackRock. For illustrative purposes only. Allocations are subject to change.
7. NAPA Advisor Research Institute (NARI) Survey, conducted March 2025 by the Retirement Leadership Forum.
Investing involves risk, including possible loss of principal. Asset allocation models and diversification do not promise any level of performance or guarantee against loss of principal. Investment in target date funds is subject to the risks of the underlying funds. The target date is the approximate date when investors plan to start withdrawing their money. The blend of investments in each portfolio is determined by an asset allocation process that seeks to maximize assets based on an investor’s investment time horizon and tolerance for risk. Typically, the strategic asset mix in each portfolio systematically rebalances at varying intervals and becomes more conservative (with less equity exposure) over time as investors move closer to the target date. The principal value of a fund is not guaranteed at any time, including at and after the target date.
This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. The opinions expressed are as of June 2025 and are subject to change without notice. Reliance upon information in this material is at the sole discretion of the reader. BlackRock does not render any legal, tax or accounting advice and the education and information contained in this material should not be construed as such. Please consult with a qualified professional for these types of advice.
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