Half of Americans aren’t saving enough for retirement.

Some say that’s due to low wages or irresponsible choices, but there’s another culprit: an expensive and antiquated 401(k) system https://trib.al/2D99X5I 

Our current system favors costly middlemen. The average fees levied on 401(k) savings hover in the range of 0.5% annually.

That compares to annual expenses well under 0.1%, and often near zero, offered by stock and bond index funds and ETFs http://trib.al/2D99X5I 

An excess cost — roughly 0.4% annually — may not sound like much.

But for a worker who dutifully puts $10,000 a year for 40 years into a portfolio that earns 6% annually, the difference in final savings can be north of $150,000 http://trib.al/2D99X5I 

With more than $5.5 trillion invested in 401(k) plans, cutting costs to savers by even 0.4% would add more than $20 billion annually to the nest eggs of American workers http://trib.al/2D99X5I 

To cut costs, policy makers should eliminate 401(k) intermediaries.

Let American workers save for retirement using their choice of designated, IRA-like accounts offering the same, cheap index-tracking funds and ETFs available outside of retirement plans http://trib.al/2D99X5I 

There’s plenty of precedent for a better, cheaper approach to saving.

Take the 529 plans sponsored by states. New York’s plan offers a range of index and age-based fund choices, many with expenses as low as 0.13% http://trib.al/2D99X5I 

In addition, most 401(k) participants don’t even allocate their investments efficiently.

For any degree of risk, 401(k) savers are getting sub-optimal returns out of expensive funds dominated by offerings from fund sponsors http://trib.al/2D99X5I 

40 years ago …

Cheap index mutual funds were new
Information was delivered in the mail
Investments had to be directed via pen and paper

In such an opaque world, employees arguably needed employers, intermediaries and fiduciaries to help them http://trib.al/2D99X5I 

The financial system is now vastly more efficient, liquid and transparent.

It’s time to reform 401(k)s, cut out intermediaries and take the burden off of employers, so that workers can enjoy every penny of their hard-earned savings http://trib.al/2D99X5I