Prior to the recession, 401ks were working well. Real estate prices were soaring and stocks were doing well. There had been a slight hiccup in 2001/2 but the Collateralized Debt Obligation (CDO) Crisis created a period of sustained stagnation. Few people had as much in their 401k in 2013 as they had had before the CDO Crisis struck, a period of 5 or 6 years which can be critical, especially for those creeping closer to retirement.
There has been a significant change in retirement planning over the last couple of decades. 401Ks have become far more popular than the plans where the employer is providing the benefits so the poor performance of 401ks has increased the problems for workers, even though they have acted responsibly in opening a 401k. At the same time the Social Security System is not geared up to fund retirement and as it stands the System is likely to pay even less in the future.
The Social Security System Faces Problems
Estimates suggest that by the mid-2030s demands on the System will lead to a reduction of benefits across the board in excess of 20%, a huge problem in that benefits are currently regarded as insufficient. The problem is that fewer people are contributing, people are living longer and there are more of them claiming. You may say it is obvious that more funds need to be put into the fund, effectively from increased taxation but there appears to be little will in Congress to do that. Certainly the Republicans are looking to reduce federal involvement rather than increase it.
While the economy is improving that does not mean that companies will necessarily offer increased benefits to their employees such as retirement plans that they will fund and guarantee.
While in some ways 2030 is a long time in the future, this is an issue that needs addressing. That will not be happening this year because it is Presidential Election year. The new Administration takes over early in 2017 but the new President alone cannot necessarily change things without the support of Congress. A Democratic Administration is the best chance of reform but if there is a Republican majority in Congress, House of Representatives and Senate, any initiatives can be blocked quite effectively. Time will tell what will be proposed but in the meantime it is a real worry that an aging population has insufficient in terms of saving to live their lives in comfort, even if they do not face emergencies such as unforeseen medical bills.