The original proponents of the 401(k) plan, which has become the dominant source of retirement savings for most Americans, are rueful about the revolution they unintentionally began.
"[Many early backers of the 401(k)] say it wasn't designed to be a primary retirement tool and acknowledge they used forecasts that were too optimistic to sell the plan in its early days," The Wall Street Journal reports. "Others say the proliferation of 401(k) plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers."
Even the "father of the 401(k)," Ted Benna, tells The Journal with some regret that he "helped open the door for Wall Street to make even more money than they were already making."
Other experts agree: On its blog, the Economic Policy Institute recently declared 401(k)s "a poor substitute" for the defined benefit pension plans many workers primarily relied on, which provide a fixed payout for employees at retirement, and which have now become increasingly rare. Nowadays, "just 13% of all private-sector workers have a traditional pension, compared with 38% in 1979," reports The Journal.
That's despite the fact that 401(k)s are far less safe: "Unlike defined-benefit pensions, which provide set payouts for life, 401(k) accounts rise and fall with financial markets."
The accidental retirement revolution began in 1978, when Congress decided to alter the tax code with the Revenue Act.