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401(k) retirement plans have only been around for a little more than 30 years, but will they still be around in another 30? 401(k)s were created as a way for employees to self-direct their own tax-deferred income into a retirement plan. In recent years, however, they have faced increasing criticism for their shortcomings.
Many employers have started cutting back on matching contributions to their employees’ 401(k)s, further weakening this investment vehicle as a reliable source of retirement income. Additionally, with revenue concerns driving the Washington political climate, there has been talk of ending some of the 401(k)’s tax incentives, which would make them increasingly less valuable. 401(k)s may not disappear entirely in the next 30 years, but don’t expect the 401(k) of tomorrow to be entirely recognizable. Changes might include mandatory enrollment for employees, the passing along of management fees to account holders, and more investment options offered by the employer.
Unsure what type of retirement account is right for you? TD Ameritrade provides an easy to use retirement calculator. This calculator helps you determine the impact of different types of savings accounts.