Here’s another example proving once more that defined contribution plans are nothing more than glorified savings accounts. Non-profit Transamerica Institute published a study in September estimating that nearly 1 in 5 Americans has raided their retirement accounts to pay for family caregiving. As laudable as it is for one to take on this responsibility, using precious retirement assets is the wrong gameplan.

The transition from defined benefit to defined contribution plans has placed much more responsibility on the individual to fund, manage, and disperse a retirement account. Unfortunately, we’ve also made it too easy for participants to stop contributing, take loans, grab the assets prematurely, etc.  We reported earlier this month in our latest KCS Fireside Chat that the U.S. Government was permitting hardship withdrawals without penalty for those impacted by the several severe weather incidents in 2017.

It is terrific that many companies in the private sector offer at least some form of a retirement vehicle but we currently have nearly 40% of our employees lacking access to an employer-sponsored plan. For those that do have access, we need to dissuade them from touching those assets prematurely.  Median account balances are anemic, even for those nearing retirement. Let’s eliminate the easy access to these “retirement” assets by putting into practice policies to restrict access.