“After a 40-year-long shift from traditional pensions to individual 401(k) retirement accounts, Americans’ financial security is now defenseless against whatever crisis comes along,” according to a recent article in Bloomberg.

The article cites a recent research study that found late baby boomers (now 55 to 60 years old) have saved far less in 401(k)-style contribution plans than their older cohorts. “This result was puzzling and perverse,” the article said, adding, “The more time Americans spent in the 401(k) system, the less they were managing to save.” The researchers attributed this in large part to the financial crisis of 2008 which destroyed a great deal of wealth in that age group and “derailed millions of careers. In the aftermath, they earned less and saved less than older boomers had at the same ages.” The study also notes that Gen X and millennials appear to be following a similar track.

The upheaval of the coronavirus outbreak is adding yet another layer of trouble, the article argues, “putting livelihoods and retirement savings in jeopardy.” The resulting market sell-off highlights the vulnerability of workers who are depending on defined contribution plans (like 401(k)s), “where they absorb all the risk,” according to Alicia Munnell, a professor and a member of the research team. It also highlights the importance of Social Security, she says: “Those checks are going to go out every month and continue not matter what happens to the stock market. That really is the backbone of the retirement system.”

The article notes that the outlook for younger people has also been negatively affected. “On the upside, if you are very young, it’s possible that today’s lower equity valuations will improve your future returns. But that assumes you are in a position to save and invest now. That’s difficult when millions lose their jobs and businesses see revenue drop to zero.”