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You and me both, I much prefer the 401K model.
401ks are still related to the person's place of employment, so they don't actually solve that problem. I'd rather see us ditch them in favor of higher contribution limits to IRAs.
Defined-contribution retirement plans (401ks and IRAs) in general are not an adequate replacement for defined-benefit ones (pensions and Social Security) because, frankly, people are too stupid on average to plan properly for their future. And even if you think stupid people deserve what they get, it's still a problem that affects you because of the collective burden massive numbers of indigent elderly would put on society.
401ks never should've been created, and the replacement for private employer pensions should've been an expansion of Social Security.
(I say all this as someone with much larger than average retirement savings who's aiming for FIRE, by the way. This is a critique of the system from someone who has benefited from it, not sour grapes from a stereotypical poor millennial.)
Don't understand, could you elaborate? FIRE?
"Financial Independence; Retire Early." See also: https://en.wikipedia.org/wiki/FIRE_movement
TL;DR: I keep my household expenses very low (roughly $30k/year) and save a very high percentage of my income so that I can retire very early. The pandemic changed my plans a bit, but I'm expecting to be done by age 45. (By the way, to address a common criticism of the idea: "retire"means doing whatever I want without being beholden to working for a wage, not necessarily vegging out in front of the TV and stagnating as certain workaholics assume. The important distinction is that I could choose to work if I wanted, but wouldn't need to.)
Related, yes, but if I leave my job I don't lose my 401K. I like my employer matching funds in it.
I might agree with you if I had the option of opting out of Social Security. It's an absolute disaster and it'll never be fixed. You can say it should be, but if we're debating impractical solutions we may as well just include "everyone lives forever and always has everything they ever need".
401ks are a time bomb waiting to go off. If / when there's another severe stock market crash (and make no mistake one is coming) tens of millions of retirees are suddenly going to be penniless.
If a crash of that magnitude happens it's not like social security would fare any better. At that point you're talking about full scale economic disaster that affects the entire world.
It doesn't require a full scale Great Depression style meltdown, the 'downturn' of 2008 caused significant difficult for many, it simply requires a sharp enough retraction of Investment Capital. That retraction is already in progress as the retirement rate for Boomers escalates and more of them begin selling their stocks and bonds; either directly or through their retirement instruments like 401ks and Pensions.
I'm not a doomer but I am fairly convinced that 401ks are a timebomb.
401Ks are just investment accounts. They have exactly as much risk as you expose yourself to. Balance your portfolio, use index funds intelligently, don't put all your eggs in one basket, and you'll be fine.