[EggsOnToast]

I agree that it's worth acknowledging the effects of 401ks as having some downsides for retirement in general. That said, I don't think it's fair to consider it a "significant" downside at face value when the upside of the transaction is that you can leave it to your heirs. For someone who values individual agency and family values that's going to be an upside, for someone who values optimizing around what benefits society at large it's obviously a negative. I might also be wildly misunderstanding you though so please correct me if I've gone off track.

[ThrustVectoring]

I'm optimizing both for "what system is best for society to implement" as well as "what system is best for individuals within it". There's a pretty significant individual upside - people who were unable to save enough for retirement can now retire due to their tax-advantaged plan earning mortality credits.

Being able to leave assets to heirs comes at a price. Just look at the pricing of the different single premium immediate annuity options - anything that also preserves assets to heirs in certain conditions also costs significantly more for the same income stream. The goal of retirement programs in general should be to ensure that as many people as possible aren't destitute in old age as cheaply as possible, IMO.

[pyoung]

If you plan for a 20 year retirement, but live an extra 10-20 years and run out of money, that is a pretty significant downside.

Another advantage of retirement policies that can take advantage of actuarial risk, is that they can also adjust their market risk to match the actuarial distribution. The common advice is to have most of your 401k in bonds and other safe assets by the time you retire to protect against market volatility. But if you live another 40 years, you will have missed out on a lot of potential investment return if you were all in on bonds. Pooled retirement solutions can balance those risks better.