Do-It-Yourself Retirement

Mention retirement, and many people dreamily imagine quiet days on the golf course or long walks on the beach. But as the burden of assuring retirement security is increasingly shifted from employers and the government onto the backs of workers, a far less tranquil picture is emerging (page 100). Millions of baby boomers are financially unprepared as they approach traditional retirement age. A staggering half of households headed by 50-to-59-year-olds have $10,000 or less in their 401(k) accounts, for instance, even as public and employer retirement benefits are being trimmed. To avoid a crisis, government, businesses, and employees must make critical choices in the coming years.

Washington's role in all this is smaller than many people think. That's because the feds already have approved a host of tax-advantaged retirement savings products, such as individual retirement accounts, 401(k)-type savings plans, and annuities. Across-the-board expansion of such incentives usually results in more-affluent workers shifting existing savings from taxable accounts into new tax-advantaged accounts -- costing the Treasury billions in lost revenues without spurring much new saving. So federal efforts to boost retirement savings should target poor and working-class households, which have lower savings rates.