Employers who use automatic enrollment offer a lower match to employee contributions
Households in the top fifth of the income distribution reap 70 percent of the tax subsidies. Money in retirement accounts (unlike pension benefits) can be bequeathed to heirs, perpetuating wealth inequality.
Employers have little incentive to expand benefits. Some 401(k) fans contend that automatic enrollment (requiring employees to opt out of a regular contribution, rather than opting in) could increase participation. But evidence suggests that employers who use automatic enrollment offer a lower match to employee contributions in order to control their costs.
Many families who manage to accumulate retirement savings are forced to dip into them when they experience unemployment or other unexpected economic stress. The 10 percent withdrawal penalty makes this a particularly costly way of paying bills.
An increasing percentage of workers are being forced to stay on the job longer than they had planned. The percentage of workers expecting to retire after age 65 increased to 33 percent in 2010 from 11 percent in 1991 and 19 percent in 2000. That's a hardship not just for the older generation but for the younger generation waiting for jobs to open up.
-- Nancy Folbre