Centerbridge Partners wants to bring private credit into the retirement accounts of everyday American workers. The $46 billion investment giant is not alone. A wave of Wall Street firms is now racing to unlock the massive 401(k) market, and the outcome could reshape how millions of people save for retirement.
Why Wall Street Is Eyeing Your Retirement Savings
U.S. 401(k) plans hold about $7 trillion in assets.1 The broader defined contribution market stands at $13.6 trillion and is expected to reach $18.1 trillion by 2029.2
That is a staggering pool of money. And private credit managers want in.
Jeff Aronson, co-founder and managing principal of Centerbridge, told Bloomberg Television that he sees a real place for private credit in 401(k) portfolios.3 He called private credit “a safe investment for 401(k) participants,” adding that the most important factor is that investors know what they are buying.4
Private capital has grown from $1 trillion to nearly $3 trillion in a decade.5 Direct lending now matches the broadly syndicated loan market at $1.5 to $2 trillion in size and is forecast to reach $3 trillion by 2028.6 With that kind of growth, managers need fresh sources of capital. Retirement accounts offer something rare: steady, long term money that does not chase short term returns.
The potential impact is massive. Even a small allocation to private credit could move billions into private markets.1
private credit firms targeting 401k retirement plan access
Trump’s Executive Order Changed the Game
On August 7, 2025, President Donald Trump issued an executive order directing federal agencies to work on expanding access to alternative investments for participants in 401(k) and other defined contribution retirement plans.7
The order instructs the Department of Labor to review and clarify its guidance on fiduciary responsibilities under ERISA, with the goal of reducing regulatory and litigation barriers.7
Shortly after, the DOL rescinded its 2021 statement cautioning against private equity in DC plans, signaling broader acceptance.8
That move sent a clear message to the industry. “In 2026, we’re going to start seeing more of this come into play, more than just the interval funds,” said Cheryl Nash, president of APL at InvestCloud.9
Here is a snapshot of key industry moves following the executive order:
| Firm | Action | Timeline |
|---|---|---|
| State Street Global Advisors | Launched target date funds with private market exposure | April 2025 |
| Empower | Announced private market access for 19 million participants | May 2025 |
| Goldman Sachs | Launched Goldman Sachs Collective Trust Private Credit Fund | July 2025 |
| Goldman Sachs and T. Rowe Price | Co-branded target date strategies with private market sleeves | Launching mid-2026 |
| Centerbridge Partners | Signaled plans to seek 401(k) access for private credit | 2025-2026 |
How Private Credit Could Show Up in Your 401(k)
Most workers will not see a standalone private credit fund appear on their plan menu. Instead, the industry is building vehicles designed to fit inside familiar retirement products.
Firms seeking 401(k) access tend to test incremental structures. Approaches under discussion include target date funds with a small private credit sleeve, collective investment trusts tailored for large plans, and interval or tender offer funds with controlled liquidity terms.10
Target date funds are the primary gateway. 97% of DC plans offer target date funds, and they hold nearly half of plan assets.8 Nearly 70% of new DC plan contributions flow into them.8
T. Rowe Price plans to introduce target date funds that combine traditional public market assets with a modest allocation to private equity, private credit, and other alternatives.11 The exposure will taper as clients near retirement.11
That design matters. A 25 year old worker saving for decades could hold a larger private credit allocation than someone retiring next year. The idea is to match the investment’s long lock up periods with the saver’s long time horizon.
Reports indicate that the average 401(k) provides yields ranging from 5 to 8 percent, while private credit yields average 10 percent.12
That yield gap is exactly what draws both managers and savers to the table.
The Risks Workers Need to Understand
Not everyone is cheering. Critics argue this push serves Wall Street more than Main Street.
Some see it as “a dangerous experiment that could expose retirees to high fees, murky valuations and money they can’t touch when they need it most.”5
Here are the core risks retirement savers should know:
- Higher fees: Private equity firms typically collect a 2% management fee, plus 20% of the profit.13 That is far above the cost of a typical index fund in a 401(k).
- Liquidity problems: Some private credit funds have already demonstrated the ability to halt investor withdrawals during stress events.14 In the fourth quarter of 2025, private credit investors pulled more than $7 billion from some of the biggest funds.15
- Valuation challenges: While the headline default rate in private credit has remained below 2% for several years, once selective defaults and adjustments are counted, the “true” default rate approaches 5%.16
- Concentration risk: Reports indicate that roughly 40% of private credit loans are tied to software companies.14 If that sector stumbles, losses could ripple through retirement accounts.
Studies on the performance of state and local pension plans show that the addition of private equity has not increased the return or reduced the volatility in those plans.17
That finding should give every plan sponsor pause.
What This Means for Your Retirement
According to a recent report by Escalent, one in four DC plan advisors said they are likely to recommend alternatives in their lineups, with another 10% stating they already are.9
The momentum is real. But so is the caution.
Mercer believes that for most DC plans, private investments are likely most appropriate when offered through a multi-asset vehicle that is professionally managed, such as a target date fund.18
For workers, the practical advice is clear:
- Check your plan. Ask your HR department or plan administrator if any private market exposure has been added.
- Read the fine print. Look at fee disclosures carefully. Even small fee differences compound over decades.
- Know your risk. If your target date fund adds a private credit sleeve, understand that a portion of your savings may not be easy to sell during a market downturn.
- Ask questions. Former DOL official Lisa Gomez stressed that there must be “a concerted effort to be educating both plan sponsors and retirement investors about what these things are.”13
The challenge is not simply to offer access. It is to offer access that survives a downturn without forcing disorderly asset sales, harming participants, or triggering political backlash.19
The race to bring private credit into 401(k) plans is no longer a future possibility. It is happening right now. Centerbridge, Goldman Sachs, Blackstone, Apollo, and others are building the products and forming the partnerships to make it real. For the roughly 70 million American workers with 401(k) accounts, this could mean higher returns and broader diversification. Or it could mean higher fees and hidden risks buried inside the default funds they never chose. The answer depends on how well regulators, plan sponsors, and the industry itself protect the people whose retirements are on the line. Drop your thoughts in the comments below and let us know where you stand on private credit entering retirement plans.
