401(k) Plans Are Making Wealth Inequality Even Worse: Study

An increasing reliance on 401(k) retirement plans is making wealth inequality worse, according to a new study. Photographer: Scott Eells/Bloomberg via Getty Images

Not only is the typical 401(k) a lousy way for most people to save for retirement, it is also making wealth inequality worse, according to a new study.You're probably aware that in recent decades 401(k) plans have risen to replace pension plans as the first line of retirement savings for millions of Americans. But most of the benefit of these plans, such as it is, has accrued to the wealthiest Americans, argues the Economic Policy Institute, a left-leaning think tank, using an armada of charts.

That means the poorest Americans are increasingly left to rely on Social Security as their primary source of retirement income at a time when many in Washington are trying to squeeze Social Security benefits.

"The existence of retirement system that does not work for most workers underscores the importance of preserving and strengthening Social Security, defending defined-benefit pensions for workers who have them, and seeking solutions for those who do not," the EPI economists wrote.