Bay Area Expert Has Concerns About 401K Plans

PALO ALTO (KCBS) – It wasn't long ago that most retirees relied on traditional pension plans to get them through retirement.

But now, it's largely 401K plans, a trend that is troubling to Bay Area retirement expert Dr. Jason Scott.

Scott is the managing director of the Retiree Research Center in Palo Alto and he said gone are the days of old for potential retirees.

"Millions and millions of Americans are just now starting to reach retirement with not a pension promise from their company, but more of a pension portfolio," he said.

KCBS' Jeff Bell Reports:

More specifically, a 401K plan, that provides retirees a lump sum and a big challenge.

"The real difficulty is, how do you manage money in such a way that it lasts for your retirement," Scott said.

His solution is one that is gaining traction in the retirement planning world; working with policy makers and service providers to develop a whole new generation of 401K plans with different income options.

"It offers the ability to tap into their full balance if they need to," Scott said. "But then, have some degree of security so that they don't have to worry about running out of money."

Scott presented his plan in a brief last month for the Stanford Institute for Economic Research.

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