A recent NYT editorial about 401(k) accounts included these paragraphs:

A calculation by Gary Burtless of the Brookings Institution showed that a 401(k) participant who retired in 2008 after contributing 4 percent of pay over 40 years and investing in a conservative mix of stocks and bonds would be able to replace a fourth of his pre-retirement income. That is only half as much as a similar worker who retired during the bull market in 1999, but far better than retiring in 1974 when markets were in a swoon.

The only way to avoid wide variations in outcomes would be to develop a savings plan in which the government shared the risk — say, by providing a guarantee that returns would not fall below a certain level. The issue is complex and deserves further study and debate.

I posted this response:

We need to look deeper, or, rather, look further upstream. The problem is much deeper than this analysis goes.

We have permitted a wealth-concentrating machine to grow in our midst. It funnels what ought to be our COMMON wealth into private and corporate pockets and portfolios, domestic and foreign. What ought to belong to all of us – the economic value of natural resources, the value of land and other things the classical economists would recognize as similar to land even though they knew nothing of electromagnetic spectrum, geosynchronous orbits, LaGuardia landing rights, (etc.) are privatized. Those who own them – and the ownership of such things is VERY concentrated – aren’t keen on changing the system to share them with the rest of us. (The Federal Reserve Board’s 2007 Survey of Consumer Finances showed that 1% of America’s households have over 1/3 of our wealth, and 10% have over 70% of it. The bottom 50% of us have 2.5% of it.)

Looking more deeply at the 2007 SCF, for the four classes of investment assets, which together represent 50.3% of household net worth – stocks, mutual funds, retirement assets and business equity – the top 1% of us had 45.9%; the top 5% 73.5%; the top 10% 83.1%. And between 2004 and 2007, our top 1% received 56.5% of the aggregate increase in these four classes of assets. The bottom 50% of us got 1.5% of the aggregate increase.

401(k)s are NOT going to put a dent in that.

Looking at retirement assets alone, the top 10% of us held 59.5% of them, and the bottom 50% held 3.8%. Retirement assets represented 13.8% of aggregate household net worth. Increasing that to, say, 15% or 18% of aggregate net worth,, and increasing the share of that 15% or 18% held by the bottom 90% of us from from 40.5% to, say, 70% – a highly unlikely event – ISN’T going to change the outcome for us.

We need deeper reform. Nibbling at the edges may make us feel good, but it isn’t going to slow down or pause or reverse our wealth concentration machine. For that, we need to understand the extent to which we are permitting the privatization of that which rightly belongs to all of us together.

I suggest starting with the ideas of a 19th century seer, Henry George. He described the wealth-concentrating mechanism, and provided a simple, elegant remedy which we ought to be utilizing today.