3. The Extinction of the Traditional Pension

Forty years ago, the three-legged stool of retirement income consisted of personal savings, a company pension, and Social Security. Today, that stool is missing a leg. The massive corporate shift from defined-benefit plans (pensions) to defined-contribution plans (401(k)s) transferred the burden of investment risk entirely onto the worker.

Because so few workers retiring today have a traditional pension to rely on, Social Security has had to step up and act as a replacement. It is now the only steady, predictable monthly income most people receive.