What you read in the below referenced report is limited perspective, far left political ideology and slanted rhetoric. Outright nonsense in some respects.
All that is a shame because it’s a serious issue that deserves an objective, realistic discussion. The problem is not 401k plans, the problem is Americans and their new concept of work, compensation and saving.
Less than half of all working Americans ever had a pension at their peak of popularity. The adequacy of retirement income regardless of the source always reflected the income of the individual which is (unfortunately) often reflective of race, ethnicity, education and marital status. None of that is the fault of the 401K plan. In fact, most low income workers had little chance of ever having a pension, but many do have a 401(k) with an employer match.
Yes, Americans would be better off with a defined benefit pension, but as I said, except for the public sector that was never a majority of workers. 401k plans at first supplemented pension plans in large employers, an added benefit. They became dominate over defined pension plans for several reasons; 401k plans have more predictable costs, no long-term liabilities, lower costs, no employer cost fluctuation based on the stock market and interest rates and the fact pension plans delivered value only for long-term employees; something that rarely the case these days.
The median tenure for workers age 25 to 34 is 3.2 years.
The median tenure for employees age 65 and over is 10.3 years.
Workers in management, professional, and related occupations had the highest median tenure (5.5 years).
Workers in service occupations had the lowest median tenure (3.2 years).
A pension plan will produce little or no value with those employment numbers.
As far as investments go, $2,000 invested in stocks in 1996 (before the recession) would give you around $7,510 today. And, that does not include the compounding growth of ongoing investments by the individual reaping the value of the drop in the markets in 1998/99 and the following bull market.
The median household net worth in 2008 was $49,932 and in 2019 it was $97,300, nearly double. Net worth in 2019 for individuals 65-74 was $224,100 and 75+: $264,800.
Any individual who actually lost money during the recession did so most likely because they panicked, got out of the market and locked in their losses. 😱 I retired in January 2010. From December 31, 2009 until February 2020 my 401k increased 68% (factoring in RMDs) and that’s with over 40% in fixed income. In absolute terms after taking six required withdrawals my account balance is still 38% higher than the day I retired.
A recent report by the Economic Policy Institute (EPI) makes it clear: The 401(k) plans Americans rely upon for retirement income are “inadequate and unequal,” and have increased gaps in retirement preparedness based on income, race, ethnicity, education and marital status. Moreover, the net worth of households approaching retirement fell by half in wake of the Great Recession and has only slightly improved since then.