Reforming the U.S. 401(k) System
Morningstar's director of policy research offers some reflections on the state of affairs.
In his two most recent columns, my colleague John Rekenthaler outlined why he thinks the U.S. 401(k) system has failed and how to replace it with a national, universal retirement system.
In sum, he argues that a solely employer-based approach has made our system inequitable because many people, through no fault of their own, do not have access to a defined-contribution retirement plan, like a 401(k), at work. Without a workplace plan, these unlucky workers have few options to meaningfully prepare for retirement. Further, John discusses the inadequacy of the system for those that do not save enough or let their assets leak out when they change jobs or cannot pay back a 401(k) loan.