The Pension Protection Act is proving to help people better prepare for retirement by easing employers liabilities for automatically enrolling workers in retirement savings plans. But millions of middle- or lower-income Americans are still underserved, particularly if they work for small employers that dont offer a 401(k) plan, The Wall Street Journal reports.
One of the latest suggestions is to automatically deposit a portion of workers salaries into an IRA, either of the employers or the employees own choosing, up to the annual limit of $5,000. In this scenario, employers would not make a matching contribution and the investment options available would be few, with the default option a target-date fund-of-index funds.
Critics, however, fear that investors might be tempted to withdraw assets from such funds and to disregard their regular 401(k). Some fear that a government-run savings program would undermine the privately operated retirement savings industry.
Another solution is to finally be able to provide low-cost retirement savings and planning advice for the masses.
When we look at everyday families in the U.S., said Andy Sieg, who runs an investment advisory service at