This year marks the 30th anniversary of the 401(k), the revolutionary retirement savings vehicle that has been annihilating pension plans, empowering individuals to take part in the stock market—and that left retirees with the misfortune of leaving the workforce in 2000 or 2008 badly off.

The cracks in the system are prompting many asset managers, regulators and retirement experts to take a hard look at these 401(k) flaws and how they can be fixed. First case in point is how difficult it is for individuals inexperienced in investing to assemble an appropriate portfolio, savings rates and reallocate both.

As Alicia H. Munnell, director of the Center for Retirement Research at Boston College, puts it, “I find having it all up to individuals doesn’t make sense.”

Of course, automatic enrollment, defaults and target-date funds make up for some of these faults, but with only 50 million U.S. workers participating in 401(k) plans, with a total of $2.3 trillion saved, the 401(k) is clearly vastly underutilized, people clearly are not saving enough and the industry is coming up far short of where it should be.

Put into more personal terms, the average 401(k) account balance is shy of $46,000 and the median value is $12,655, according to the Employee Benefits Research Institute.

That same survey found that 54% of those who have saved for retirement have less than $25,000 saved, and 27% have less than $1,000 socked away.

Second case in point: The recession prompted many employers (or gave them the excuse) to stop matching contributions, making it even harder for workers to realistically prepare for retirement.

The third major improvement to 401(k) plans increasingly being suggested, including by the Obama administration, is to include annuities and possibly to automatically allocate half of a retiring worker's savings to an immediate annuity. This way, the argument goes, retirees would have at least some of their money in guaranteed lifetime income—mirroring the safety and allure of pension plans.

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