The research demonstrates how 401(k) plans play a critical role in Americans' retirement security. As
To improve and expand access and participation in DC plans, Brown and Weisbenner recommend better incentives for small businesses to offer plans and making it easier to include part-time workers. They also recommend boosting contribution rates through automatic enrollment and automatic escalation, which can result in higher savings rates.
To help people better manage their assets in retirement, they suggest removing regulatory barriers that have discouraged employers from including guaranteed lifetime income options in their DC plans.
DC plans have become the new foundation of the U.S. private retirement system. Employer-sponsored retirement plans provide more than 83 million American workers with a convenient, effective way to save for their golden years. Nearly two-thirds of households with DC accounts and income less than
Most DC plans include a combination of employee and employer contributions. The median employer-plus-employee contribution rate has risen to nearly 10 percent of employee income. And as the contributions have grown, so have the size of these investments.
Brown and Weisbenner say that the employer-based DC retirement plan system can be further strengthened. Policy makers, plan sponsors and participants should focus their energy on continuing to improve the existing DC system.
Keywords for this news article include: Finance and Investment,
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