Many headlines over the past couple of years have pounded home the idea that America faces a retirement crisis. Much can be improved in our existing system, but as noted in a just-released white paper, Our Strong Retirement System: An American Success Story, our voluntary, employer-sponsored retirement plan scheme, which includes 401(k) plans, provides a critical source of savings for millions of American workers at all ages and income levels.
Here are a few of the points emphasized in the paper:
• Each successive generation of American retirees is better off than the previous one.
• Those nearing retirement have meaningful retirement assets — on average, nearly $360,000 in their DC accounts and IRAs combined.
• Retirement assets constitute a major share of U.S. households’ savings and investments — $5.3 trillion from DC plans alone.
• Innovative changes like automatic enrollment, automatic escalation and life cycle investing are improving retirement security.
"Tax and retirement policy should build on the existing system, rather than destroy or destabilize it," the paper concludes. For those involved in the 401(k) industry, this is an important message to communicate to employers and plan participants on a regular basis to ensure they understand the value and contribution defined contribution plans make to Americans’ retirement security.
