The IRA and 401(k) Generation: How Retirement Became Your Responsibility

Today’s retirees and pre-retirees are part of a unique—and historically unprecedented—group. They are the IRA and 401(k) generation: the first generation to arrive at retirement with substantial personal retirement accounts, yet without a guaranteed paycheck attached to them.

That shift didn’t happen overnight. It was the result of decades of structural change in how retirement in America is funded, managed, and ultimately lived.

When Retirement Came With a Paycheck

For much of the 20th century, retirement planning was relatively simple for employees of large companies and governments. Employers offered defined benefit pension plans, promising a predictable monthly income for life, often based on salary and years of service.

In that world:

• Investment risk was borne by the employer

• Longevity risk was pooled across participants

• Retirees didn’t worry about how to spend their pension—it simply arrived each month

• The core retirement question was “When can I retire?”, not “How much can I spend?”

Social Security supplemented this income, but the pension was the foundation. Retirement income was largely automatic.

How IRAs and 401(k)s Entered the Picture

The system began to change in the 1970s and 1980s.

IRAs were introduced in the 1970s as a way to encourage individual retirement savings. The 401(k), originally a technical provision in the tax code, gained traction in the early 1980s as employers realized it could replace traditional pensions.

Over time:

• Defined benefit plans became expensive and complex for employers

• Longevity improvements increased pension liabilities

• Workforce mobility made lifetime employment less common

• Employers shifted from guaranteeing outcomes to facilitating savings

The result was a gradual but profound transition from defined benefit plans to defined contribution plans like the IRA and 401(k).

Instead of promising income, employers promised access.

How the Financial Industry Adapted—and Thrived

As pensions declined, the investment and insurance industries stepped in to fill the gap.

An entire ecosystem emerged:

• Mutual funds and ETFs for accumulation

• Target-date funds to simplify investing

• Annuities to replicate pension-like income

• Advisory models focused on asset allocation and growth

• Performance reporting centered on balances, not income

This system worked exceptionally well for one phase of life: accumulation.

Account balances grew. Statements looked impressive. The industry became highly sophisticated at helping people save and invest.

But one critical issue remained largely unaddressed.

The New Problem No Prior Generation Faced

Unlike their parents or grandparents, the IRA and 401(k) generation reached retirement holding assets, not income.

There is no automatic paycheck.

No built-in spending formula.

No default guidance on how much is safe to use.

No clarity on how long the money must last.

Instead, retirees are left to navigate:

• Market volatility

• Tax complexity

• Required Minimum Distributions

• Longevity uncertainty

• Fear of spending “too much”

• Fear of spending “too little”

This generation must answer a question previous generations rarely faced: “How do I turn this pile of money into a lifetime of confident spending?”

As a result, many retirees default to caution—underspending during their healthiest years—only to leave behind large balances, higher lifetime taxes, or unintentional legacies.

From Accumulation Planning to LifeSpend Planning

This is where the retirement planning conversation must evolve.

The IRA and 401(k) generation doesn’t need more help saving.

It needs help spending— taking control of these retirement assets and intentionally, sustainably, and confidently using them according to their personal wishes.

LifeSpend Planning was created to address this exact problem.

Rather than focusing on how much you have, LifeSpend Planning focuses on:

• How to take control of your assets to avoid others doing so for you

• How much you can safely spend over your lifetime

• How to coordinate withdrawals across different account types

• How to manage taxes over decades, not just annually

• How to align money with the life you want to live

• How to balance enjoyment with legacy—by design, not default

In effect, LifeSpend Planning provides what defined benefit plans once did: clarity and confidence around retirement income, but with more flexibility in how to do so.

A New Generation Requires a New Approach

The IRA and 401(k) generation carries more financial freedom—and more responsibility for financial knowhow—than any generation before it. Freedom and responsibility to control and utilize your assets. Retirement no longer comes with instructions so we need to use tools like LifeSpend Planning to help write them. Because when retirement assets replaced retirement income, the need for intentional spending replaced the comfort of a guaranteed paycheck—and that is the defining financial challenge of this generation.