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401(k)s Come Up Short

Democrats and Republicans agree that retirement savings plans demand reform. Whatever happens, corporations will likely lead the way.

By Beth Karlin | Updated on February 01, 2009

While the Obama administration hasn’t revealed its suggestions for retirement savings account policy, change is coming. With Starbucks, Motorola, Sears and more than 20 others suspending matching funds, reform is sorely needed. Economic hardships, meanwhile, have forced 20 percent of U.S. workers to halt contributions, says the American Association of Retired People. And BenefitStreet.com calculates that defined contribution (DC) plans have lost $1.1 trillion collectively since the market’s peak.

“The 401 (k) experiment has failed,” says Teresa Ghilarducci, a New School for Social Research professor. “We have road-tested them and they don’t stand up to the bumps of the normal financial markets and the limit of what human beings can do.”

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