The Center for American Progress says it has come up a better way to help Americans prepare for retirement, a savings vehicle that combines the best features of traditional pensions and 401(k)s.
The center, a liberal think tank, said its hybrid plan, dubbed SAFE for Secure, Accessible, Flexible and Efficient, would address many of the problems often associated with the current retirement system.
SAFE would help lower costs, risk and free employers of any fiduciary responsibility, the center said.
All sorts of new approaches to retirement savings have cropped up in recent years amid a growing realization that many American workers have saved too little to retire comfortably.
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Perhaps most dramatically, the center said its actuarial analysis found that its SAFE Retirement Plan “significantly” outperforms both 401(k)s and IRAs in terms of cost and risk measures.
It said a worker with a SAFE Plan would have to contribute only half as much of their paycheck as a worker saving in a typical 401(k) plan to have the same likelihood of maintaining their standard of living upon retirement.
It also claimed that a worker with a SAFE Plan is nearly 2.3 times as likely to maintain their standard of living in retirement as a worker with a typical 401(k) account making identical contributions.