Can Bernie Sanders Save Retirement?

It's not unique for Democratic candidates on the campaign trail to pledge up, down and all around to protect and defend Social Security, no ifs, ands or buts. But that's not enough for Sen. Bernie Sanders.

The self-described democratic socialist from Vermont – who is running for the Democrats' 2016 presidential nomination, although he is an independent – wants to not just preserve Social Security, but expand it. "We should not be talking about cutting Social Security benefits. We should be talking about expanding benefits to make sure that every American can retire with dignity," Sanders said recently in a statement accompanying a bill to increase Social Security benefits by $65 per month.

Sanders' position flies in the face of years of Washington conventional wisdom and the stance of most of the professional commentator class, which holds that Social Security is going "broke" and that benefits will inevitably have to be cut. How to do so, not whether, is the subject of debate, with the elusive "grand bargain" to "save" entitlements the holy grail of American politics.

Why then does Sanders (along, increasingly, with Democrats in Congress) not only reject that position, but call for making Social Security more generous? Because of America's broken retirement system, or as Sanders calls it, "the retirement crisis." And it's a very real problem.

Even if the state of Social Security's finances isn't great – under current conditions, it can pay full benefits until 2033 and about 75 percent of benefits after that – a few tweaks could set the program on completely stable footing. The same can't be said for the average American's retirement account. Consider these sobering statistics: Nearly 30 percent of Americans aged 55 or older have nothing in terms of retirement assets. No savings, no pension, nada. Among those in that age group who do have retirement savings, the amount they can expect to receive per month in payouts is just a few hundred dollars.

And things aren't better in the overall population. According to the National Institute on Retirement Security, nearly half of working-age households have no retirement account assets at all. That's 40 million households with zip, squat. And the median amount the American worker has in a retirement account? Just $18,433. No wonder Americans list "not having enough money for retirement" as one of their top worries.

There are plenty of reasons for this dearth of savings, but one of the most prominent is the disappearance of the defined benefit pension – which was a staple of the American workplace a generation ago but has all but vanished today – and the growth of the 401(k) as the chief retirement tool.

For a host of reasons, a 401(k) is a lousy way to save for retirement, including that it comes with a slew of fees, low participation rates and the simple fact that most of us, as well as a lot of financial advisers, are pretty bad at making investment decisions, even assuming the market is in our favor.

401(k)s, in fact, were never supposed to be the main savings tool of the American worker. They arose, as the Economic Policy Institute has put it, as an "accident of history," after one employer took advantage of a provision regarding deferred compensation in a 1978 tax law.

So the pension went away, to be replaced by a wholly inadequate substitute. And still, four in 10 workers are left out in the cold entirely, with no access to either a pension or a job-based retirement savings account. The number of employers offering retirement plans is also dropping. So the entire private retirement system is basically built on a foundation of sand, leaving out many and underfunding almost everyone else.

This has left Social Security as the main bulwark against senior poverty. According to the Center on Budget and Policy Priorities, Social Security provides the majority of cash income for almost two-thirds of its beneficiaries; for about one-third of beneficiaries, the program provides more than 90 percent of income. For one-quarter, Social Security is the only source of income; without it, they'd have nothing.

Thanks to Social Security, then, some 14 million elderly Americans are lifted out of poverty. And it's reasonable to expect these numbers to increase as more and more of the 401(k) generation leaves the workforce, even if, as Gallup polling shows, only one-third of Americans believes Social Security will be a major source of their income in retirement. (While this figure is usually used to argue that people mistrust Social Security’s solvency, it really demonstrates how unduly optimistic they are about their 401(k)s.)

Unto the breach comes Sanders and, along with him, fellow 2016 hopeful Martin O'Malley, the former governor of Maryland. Their calls for expanded benefits are welcome because, for all the good that Democrats in the Senate have done regarding making expanded Social Security a topic of legitimate conversation, as opposed to a kooky left-wing idea, nothing really beats the high-profile exposure of a presidential campaign. Even if they can't make significant inroads against the juggernaut that is the Hillary Clinton campaign, they will be giving the notion of expanded benefits more exposure than it's received in a long time, if ever.

And advocates are already hoping that Clinton herself can be swayed into supporting an expansion of the program; even if she can't, having the rest of the Democrats calling for expansion while she merely calls for the preservation of the current system will contrast favorably with the GOP's insistence on calling for Social Security cuts. (Though Clinton did oppose now-President Barack Obama's proposal to lift the cap on the payroll tax that funds Social Security – a key component of Sanders' plan – during the 2008 campaign.)

In a way, Sanders can even do some of Clinton's work for her; he's already criticized now-official 2016 candidate Jeb (errr, Jeb!) Bush for suggesting a cut in Social Security benefits via raising the retirement age. "I have a hard time understanding what world Gov. Bush and his billionaire backers live in," Sanders said.

Even if expanding Social Security benefits isn't the answer – and a plausible case can be made that we're already siphoning too much in the way of resources from the young to the old – the looming retirement crisis is undeniable. Without significant reforms to today's savings vehicles, Social Security will become even more important to the finances of today's workers once they hit retirement age. If Sanders can get that conversation started in a real way, he'll have done a ton of good, even if he ultimately doesn't win a single primary.