401(k) set for retirement?

While corporate America has no interest in reverting back to pension plans, the article did bring forth three prospective alternatives to the traditional 401(k). One is the Automatic 401(k), where a system of defaults prompts people to save more and invest more wisely. The second is a "Guaranteed Retirement Account," a government plan to ensure that workers receive 26% of pay in retirement on top of Social Security, with workers paying in 5% per year. Finally mentioned is "Retirement Insurance," where policies offered by private insurers pay for nearly 30% of retirement.

My eye of course is drawn to this third option. Instead of putting 6% of a worker's salary into a 401(k) or some other investment account, each pay period the worker would send 6% of his check to a retirement insurance provider. "The policy would work similarly to a traditional pension in that it would provide a guaranteed monthly check equal to about a quarter of your final pay, from when you quit working until you die," the article states. "…the policy would be portable. Contribute for 30 years and you would be guaranteed income in retirement, no matter how many employers you worked for."

Hmmm. After all the recent debate about a "public option" being included in health care reform, chances of a government-run system to replace the 401(k) is a distant longshot at best. But with opinion polls consistently showing that a majority of people would be willing to give up the flexibility of a 401(k) for a guaranteed return, this "Retirement Insurance" idea could well gain favor with a working population that is right now terrified of their financial prospects in retirement.