Was the tax code a mistake? No. Was it a mistake to replace pensions with 401(k) accounts? Absolutely. A pension fund has one primary benefit: it distributes f

Was the tax code a mistake? No. Was it a mistake to replace pensions with 401(k) accounts? Absolutely. A pension fund has one primary benefit: it distributes funds from those in the pension fund who contributed but died early to those who live a longer life, ensuring that all pensioners receive a steady income through end of life. A 401(k) is just an investment account with strict rules (and in many cases, poor investment choices and high fees). In a middle class life at the average American salary (which is less than $60k!), is it even possible to invest enough to support a steady income that allows you to live to be 100? I think the answer is no, even if you follow the conventional rules of saving 10% of income and re-allocating into lower-risk investments as you age. The loss of the defined-benefit pension is a tremendous blow to Gen X and beyond, and we are going to feel that impact very very hard in American society in around 20 years.