Legislation introduced by three U.S. senators last week would require 401(k) plan sponsors to inform participating workers of their projected monthly retirement income based on their current account balance. The measure aims to improve workers' understanding of their retirement plans and how they can strengthen their preparedness.

U.S. Senators Jeff Bingaman, D-N.M., Johnny Isakson, R-Ga., and Herb Kohl, D-Wis., have proposed the Lifetime Income Disclosure Act, which would require 401(k) plan sponsors to inform participating workers of the projected monthly income they could expect at retirement based on their current account balance. The measure is similar to the Social Security Administration's annual statements, which are mailed annually to workers, informing them of estimated monthly benefits based on their current earnings.

"It is estimated that half of American households will lack sufficient retirement income to maintain their pre-retirement standard of living. Yet many Americans are unaware of their financial vulnerability. Our bill is a common-sense approach to empowering Americans, and helping them determine whether they are on a path to a secure retirement," said Bingaman, a long-time Senate leader on retirement issues.