Fixing America’s Broken Retirement System

When nearly half of all Americans don’t participate in a retirement plan, and many Americans who do have 401(k)s have depleted their savings because of emergencies, now is the time to take a fresh look at new strategies for improving access to America’s retirement system, according to Michael Molinski, a New York-based economist.

Molinski contributed an article to USA Today this week, titled Analysis: How to fix America’s broken retirement system, that proposes eliminating the 10 percent IRS penalty on early withdrawals from a 401(k) or IRA, or even replacing the 401(k) altogether with a Guaranteed Retirement Account for everyone who has a job.

The concept of the GRA – devised by Theresa Ghilarducci, a professor of economics at The New School, and Hamilton James, president at Blackstone – would be mandatory, managed by a government-appointed board, and everyone would contribute 1.5 percent of their salary and another 1.5 percent would be contributed by their employer. Others have even suggested it’s time to resurrect pensions as a retirement tool.