The greatest threat to American prosperity in coming years is just beginning to raise its grey-haired head. We refer, of course, to the aging of the population that will occur over the next two decades, as some 80 million Americans (aka the Baby Boomers) are projected to reach retirement age.

Why is this inevitability so threatening? Because, according to no less an authority than Alan Greenspan, Americans have not saved enough for retirement. The good news is that life expectancies are increasing; the bad news is that increasing life expectancies throw a greater burden on already insufficient retirement and health care programs.

Unless corporate and government programs are changed to deal with these realities, the burden imposed on a shrinking portion of the population and businesses will take us back to the disastrous disincentive tax policies of the 1970s.

What to do? Ask President Bush, the management of IBM, and Peter Kalikow of the MTA. They have the only reasonable answer: getting workers to participate in funding their own retirement programs.

That is the message being sent by a corporate blue blood, IBM, in freezing its pension program. Judging by recent trends, defined-benefit programs are going the way of the dodo. Why? Because the accounting for pension plans wreaks havoc with earnings, the regulations governing the plans are caught up in a tug of war and about to become tougher, and because overall they are just too darned expensive to administer.

The upshot? More and more companies are switching to defined-contribution plans, which encourage workers to participate in their own retirements. This is a growing theme, evident in the cantankerous MTA settlement in New York and in President Bush’s inarticulate efforts to revise Social Security.

By 2020, some analysts project that about half of all Americans will be retired, compared to about 15% today. Because of many factors, this number will undoubtedly prove false, as the conventional age for retirement is likely to be put off. People are living longer and healthier, and many are postponing retirement. Also, many cannot afford to retire. Nonetheless, the shift will be great enough to cause a huge change in consumer spending patterns, retirement policies, and investing preferences.

Notwithstanding the obvious need for worker participation, not all employees are pleased with this approach.

A researcher for the Center for Retirement Research at Boston College, Keith Bender, says retirees are much happier with defined-benefit plans than 401(k)s because of the certainty of the payouts. Amazingly, he suggests that retirees would have to be paid an additional $35,000 a year from a 401(k) to compensate for the perceived increase in risk.

In an odd way, the high-profile bankruptcies of United Airlines and Delphi and the consequent uncertainty about their pension plans may help convince workers to help fund their own retirement. Employees were put on notice by those failures that even long-standing pension plans were not a guarantee of future payments.

Though there are some aspects of IBM’s situation that are unusual – for instance, its highly educated non-union workforce and the fact that its competition in the main offers almost no retirement programs – the company is not alone in wanting to escape the vagaries of a defined-benefit plan. In the past 20 years, the number of defined benefit programs in the country has dropped from more than 100,000 to about 30,000. In 2004, more than 70 of the country’s largest corporations froze their pension funds.

Is the government concerned? The head of the Pension Guaranty Benefits Corporation, Brad Belt, says the administration is mainly concerned that “companies are paying attention to what they are promising.” He does not consider impending pension legislation instrumental in causing changes such as the one made by IBM.” There is nothing in the administration’s proposal that will increase costs.” According to Mr. Belt, the government does not care how pension obligations are met, but cares very much that companies don’t fall short of their promises.

A spokesman for IBM, John Bukovinsky, says that neither impending legislation nor possible accounting changes influenced the company’s decision. Instead, management responded to the plan’s growing expense and the vulnerability of pension charges to slight changes in the capital markets.

Because of accounting regulations, a rise in short-term rates and drop in long-term interest rates caused a jump of more than $900 million in IBM’s 2005 pension expense, far more than the anticipated $500 million increase. These unexpected costs are in spite of good performance in the funds. Over the past 10 years the pension plan has returned roughly 10% a year, with about two-thirds invested in equities and one third in fixed-income securities. In 2004, the plan was up 13% against an assumed 8%.

In the case of IBM, employees will still be provided for handsomely. The 401(k) plan now being offered is one of the most generous in the country and always has been. As a result, and because the workforce has been educated about the advantages of saving through the 401(k), 90% of employees participate, and 88% defer at least 6% of their income – a far higher number than for most corporations.

It is also one of the most efficiently run plans. Jay Vivian, who administers the plans for IBM, reports that employees have a choice of 23 “core offerings” in which they can invest their savings. These are mostly index funds; overall, the plan carries an expense ratio of one-tenth of 1%. Using the clout that comes with many billions under management, Mr. Vivian evidently persuades managers to lower their fees.

Such a participatory program is unusual, but the need for workers to help fund their own retirement is not. To make the concept a reality, it is crucial that corporations educate their workers about the need to save in 401(k) programs. With luck, labor management will also see that this is the only way to provide for the growing retiree population without imposing a future crushing tax burden on working Americans.