Back in 1981, advocates of the 401(k) had hoped that the program would supplement then-prevalent corporate pensions. Instead, against everybody’s expectations, the 401(k)
outright replaced corporate pensions—something several architects of the 401(k) program now acknowledge it’s ill-equipped to do.
Former American Society of Pension Actuaries Head Gerald Facciani, who repelled an attempt to gut the 401(k) in 1986, said the notion that the 401(k) could safely replace pensions was
“a big lie” and that the program was “oversold.” Ted Benna, the former Johnson & Johnson benefits consultant credited with the development of the 401k plan,
regrets having “held open the door for Wall Street to make even more money.”
Baby Boomers are feeling the ramifications of this shortfall as they enter retirement. According to the Boston College Center for Retirement Research,
52% of U.S. households at at-risk of going poor in retirement, up from 31% in 1983.
More analysis may be found at the Wall Street Journal.