The Retirement Revolution That Failed: Why the 401(k) Isn’t Working

Aross the political spectrum, people warn of a coming time bomb in our retirement system. Many analysts believe the growing population of retirees will overwhelm the Social Security program, and that something must be done to shore up its finances.

However, there’s another slow-moving time bomb out there, and that’s the gradual retirement of workers in an era where 401(k)-style defined-contribution plans have become dominant, replacing defined-benefit pensions. A new study of the state of U.S. retirement shows that this change leaves Americans woefully unprepared for their non-working years, with resources too meager to uphold their standard of living.

Economist Monique Morrissey of the Economic Policy Institute makes this case with 32 charts that present a sobering picture for our nation’s retirees. She first analyzed data from the Federal Reserve Survey of Consumer Finances for all families with heads of household between the ages of 32 and 61, covering the thirty years before Social Security’s early retirement kicks in at age 62. And she found major disparities caused by the shift from pensions to 401(k) plans.

– The Fiscal Times

Read the full article here.