Another great article from the Wall Street Journal about how the stock market dive has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401(k) plans.

WSJ writer Eleanor Laise describes how the losses are hitting as baby boomers, the first generation to rely heavily on such plans, are beginning to retire. According to the Employee Benefit Research Institute, workers age 55 to 64 who have been in their current plans for 20 years or more saw their 401(k) account balances drop roughly 20% last year. Since those figures include new cash contributions to the plans, they understate investment losses.

The most obvious pitfall is that 401(k) plans shift all retirement-planning risks — not saving enough, making poor investment choices, outliving savings — to untrained individuals, who often don’t have the time, inclination or know-how to manage them. But even when workers make good choices, a market meltdown near the end of their working careers can still blow their savings to smithereens.

"That seems like such a fundamental flaw," says Alicia Munnell, director of Boston College’s Center for Retirement Research. "It’s so crazy to have a system where people can lose half their assets right before they retire."  To read the entire article click the link below.

Big Slide in 401(k)s Spurs Calls for Change (Wall Street Journal)