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'Create a Stronger, More Powerful 401(k)': Mark Iwry, Senior Adviser to the Treasury Secretary

Iwry is senior adviser to the U.S. Secretary of the Treasury and deputy assistant secretary for retirement and health policy.

Tens of millions of working families in this country have no access to an easy, convenient way to save on a tax-favored basis. They are not eligible for employer-sponsored programs, such as pensions or 401(k) retirement plans. The President has proposed a major expansion of retirement savings coverage. The proposal for "automatic IRAs" would extend the power of automatic enrollment to those employees who don't have access to a 401(k), by letting them use their employer's payroll system as a conduit to channel their savings through automatic enrollment into individual retirement accounts (IRAs).

We can also improve the current system. One key step is to create a stronger, more powerful 401(k) by automatically enrolling newly hired employees plus existing employees who are not participating. (Employees are always free to opt out.) You can raise the initial default contribution to 5 or 6 percent of salaries, and it can escalate so that the percentage automatically goes up every year.

Not everyone can make double-digit contributions to a retirement account. But we can help people understand that most of us will probably need to contribute 10 percent or more of our pay each year -- in addition to employer matching contributions -- in order to achieve adequate retirement savings.

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