401(k) Created a Generation of Millionaires — But Left One-Third Out

Full analysis

Economist Allison Schrager argues in Bloomberg Opinion that the 401(k) has been one of the most effective wealth-building tools ever created, pushing stock ownership among American households from 32% in 1989 to 58% by 2022 and helping nearly one-fifth of households reach a net worth of a million dollars. Ted Benna, widely credited as the plan's inventor, disagrees — he contends the accounts are too complex and mostly benefit wealthier savers, noting that roughly one-third of Americans, most of them lower-income, have no account at all.

Schrager counters that lower-income workers already contribute 12.4% of their wages to Social Security (split between employee and employer), which for many replaces a high share of working income, making additional mandatory saving less clearly beneficial. She dismisses Benna's proposal for employer-funded performance-bonus accounts as adding unpredictability to retirement planning, and raises Australia's universal government-administered retirement account system as a better model for expanding coverage — while noting that Australians lack a comparable Social Security benefit, so total savings demands differ. The practical takeaway for readers: the 401(k) remains a powerful tool if you have access to one and can contribute, but the system's gaps are real and debated.