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Is it Time Yet?


Retire the 401(k)! Retire the 401(k)?

Ten years ago, this was the October 9, 2009 Time Magazine cover.1 The author asserted that America would be better off if we “retired” the 401(k). He favored re-introducing defined benefit pension plans. Some continue to favor such actions.2

One of my predecessors, David Wray, evaluated the article. He confirmed that the article’s references to the average account balance failed to:3

  • Point out that a “typical” 401(k) participant only has a few years of participation in the plan, and 
  • Acknowledge the billions rolled over from 401(k)’s into IRAs, or that millions of participants have accounts with current and former employers. 

Wray noted that: “Comparing 401(k) values at market peaks with market bottoms is ridiculous,” and “The article’s indication that (the 401(k)) is a perk for highly compensated executives is laughable.” He concluded with this prediction:

“… We are at the dawning of a 401(k) age. Because of the 401(k), there will be more employer-sponsored retirement plans, and the plans will continue to be better designed. There will be more retirement savings, and those savings will continue to be better invested. Because of 401(k) more people will have more money in retirement than ever before. Polemics like the one in the Time article are on the wrong side of history. …Participants are not blaming their employers for market performance and (they) continue to save in their plans, benefiting from the recent improvement in equity markets. ”

I believe David was able to predict the future in October 2009 because he could see how the 401(k) marketplace and 401(k) plan designs had started to change.4

The Pension Protection Act of 2006 and accompanying regulations announced the rebirth of the 401(k), not its retirement!

1S. Gandel, Why It’s Time To Retire the 401(k), 10/9/09, Accessed 10/19/19 at:,33009,1929233-1,00.html
2J. Towarnicky, Make Retirement Plans Great Again? 12/11/18, Accessed 10/19/19 at: See also J. Towarnicky, I’m Dreaming of a … Well Funded Pension, 12/06/18, Accessed 10/19/19 at: c
3D. Wray, Time Magazine 401(k) Article: Advocacy Dressed Up In Journalism, 10/13/09, Accessed 10/19/19 at:
4J. Towarnicky, What’s The Story? Part 1, 12/19/18, Accessed 10/19/19: