As recently as a 2013 Gallup survey and a 2018 IRI report, itappears current retirees may have less worries because they benefitfrom the last vestiges of the corporate pension plan era. (Photo:Bigstock)

Everyone agrees there's only one thing worse than a 401(k) plan– not having a 401(k) plan. If that sounds obvious to you, you mayhave discovered the source of the debate on retirement policy.

Teresa Ghilarducci, known for her criticism of how the 401(k)has been delivered to employees, has her own thoughts on how toimprove retirement (see “Exclusive Interview: Teresa Ghilarducci WorriedAbout de facto Poverty in Future Retirement,”FiduciaryNews.com, February 21, 2019).  It's important youunderstand her ideas, not necessarily because you should orshouldn't agree with them, but because they will stimulate your ownthinking.

And exactly what thinking should be stimulated?

Let's consider what Ghilarducci says. She believes we're headingtowards a retirement crisis, but not for everyone. That's animportant point. Why? Because it causes you to consider why someare headed in the right direction. What are they doing right? Whatallows them to do it right? How can their ways offer a guide we canreplicate for others?

Clearly, in her criticism of the 401(k) industry, she implies anoptimal plan design exists. It may not be the ideal solution toher, but it represents the best achievable practice given currentretirement policy. Are we striving to move all 401(k) plans closerto this optimal design? If not, what's holding us back? How can weovercome these obstacles?

Americans, if nothing else, are a resilient bunch. They havedemonstrated they can change and adapt to whatever slings andarrows outrageous fortune hurls at them. Studies show those whohave yet to retire are more anxious than those who have alreadyretired.

You might say this is anecdotal and that it doesn't prove much.Actually, while that may be the case, it would still be better thanthe real story. As recently as a 2013 Gallup survey and a 2018 IRIreport, it appears current retirees may have less worries becausethey benefit from the last vestiges of the corporate pension planera.

This implies younger generations won't have the same breadth ofincome sources in retirement. They will only have their own savings– namely their 401(k) plan – to support them. And Social Security.And if they don't have a 401(k), then it's Social Securityalone.

What does this mean? The 401(k) plan is approaching its 40thanniversary. As a result, in the next five or ten years, we'll seebaby boomers retiring who have contributed to their 401(k) plantheir entire career. Presumably, these retirement plan accountsshould represent the maximum savings amount. Will that be enoughfor their owners to retire?

Finally, what about Social Security? The government says it willgo insolvent in fifteen years. Now, let's not get into that messright now. Let's merely assume the worst for a moment. If we can'trely on Social Security, what happens? Will some futureadministration mandate that all those who aggressively saved fortheir own retirement must now cede a portion of their savings tothose who didn't?

Now let's not assume the worst for Social Security. Let's assumeit's merely taxed away for those who have saved “enough” forretirement – but only for those born after 1970 (that'll buy ussome time). This implies anyone under the age of 50 has at least15-20 years to save “enough” to avoid the need for Social Security.Will the existing retirement plan “catch-up” provision be enough?What can we put in place to help boost their retirement savings?Can companies enact compensation policies to facilitate acceleratedretirement savings for employees over 50?

Finally, rather than focusing on the near-term problem potential(i.e., for those 50 and older), what if, instead, we began to lookat the potential long-term problem. In other words, how can we helpsolve the retirement crisis by focusing on those under 30? Howabout those under 20? What if parents and grandparents could helptheir minor children and grandchildren begin saving forretirement?

How do you solve a problem like retirement? There's a differentanswer for each generation.