cliff like pieces of puzzle with people standing on them

Pensions did a better job of keeping retirees solvent once they left the workplace, and 401(k)s not only don't keep up but also exacerbate the lack of retirement savings for most of the American population.

So says a report from the Economic Policy Institute, which finds that not only do 401(k)s fail to provide "substantial income" in retirement, the groups that suffer the most from the plans' inadequacies are those who are already suffering financially.

In fact, the report calls the shift from pensions to 401(k)s "a disaster for lower-income, black, Hispanic, non-college-educated, and single workers, who together add up to a majority of the American population."

The effects of the switch go even further, though, with many upper-income white college-educated married couples lacking adequate retirement savings or benefits—and women "remain much more vulnerable in retirement due to lower lifetime earnings and longer life expectancies" despite having made progress in narrowing the gap between their own financial status and that of men in the workplace.

In short, the report says that the retirement system isn't working for most workers.

One problem is that although there are provisions for preferential tax treatment for employer provision/employee participation, "tax incentives for retirement savings are poorly targeted and ineffectual, as most of the subsidies go to high-income taxpayers who steer savings to tax-favored accounts rather than increase the amount they save."

Other problems: Retirement account assets are more influenced by market downturns than pooled pensions since contributions are voluntary and can be withdrawn; assets are less diversified and returns are more volatile.

In addition, participation has declined, and the share of families that even have retirement savings fell after the Great Recession. And most families have little or no retirement savings at all.

The gap between the haves and the have-nots, says the report, has grown since the Great Recession, and now high-income families are seven times more likely to have retirement account savings as low-income families.

Single people are less likely to have savings, and if they have them, what they have is less than what married couples have.

Last but not least: 401(k)s magnify inequality, and "retirement inequality is greater than income inequality even in peak earning years."

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How 401(k)s increase the retirement preparedness gap

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