A few years ago, the members of the U.S. Congress made several of their rare good decisions; i.e., they passed the enabling legislation for individual retirement accounts, and later, for Roth IRAs and 401(k) accounts.
Those are a good start, but they're based on an unstated, incorrect assumption; that retirees will spend almost all of their retirement savings while they're still alive, leaving little or no assets to the next generation.
Let's pretend that this mistake has been fixed, and see where that takes us. The fix is actually simple. We change the tax law to allow those who inherit assets in a retirement account to roll those assets into their own accounts, without triggering a taxable event. There are a couple of other tweaks: abolish the requirement that non-Roth account holders take distributions from those accounts, and remove the five-year time horizon for Roth accounts. The result of these changes allows children to inherit their parents' retirement assets without any tax consequences, so those assets can continue to earn income. So...
Arthur and Amy Doe grow up as neighbors, get married, have a couple of children. To provide for their golden years, they open a Roth IRA (or use a Roth 401(k) at work). They save $235 per month. For the first 30 years, they keep their savings in a broad market index fund, earning around 10%. Then they shift their savings to a safer bond or target-date fund for another ten years, at a 6% rate of return. When they retire, at age 65, their savings have built up to about a million dollars.
They had decided, forty years before, to leave as much as possible to their children. Their savings were earning about $5000 per month, so they budgeted for that, and tried not to spend it all. In this they were largely successful; when they passed away (at around age 90), their account had grown to about $1.1 million.
To this point, the story's no different from the real world. Now, it changes.
Beth and Brian Doe had grown up with the knowledge that they could expect a significant boost to their savings, right about the time they would retire. It wasn't a guarantee, but it let them live a little better than their parents, saving about half as much per month. For Beth, that meant she had a fallback if her marriage went sour, and less strain on her family's finances during the times she chose not to hold a job. For Brian, it freed up resources for his children's education funds, among other things. In Brian's case, it also meant the nest egg he and his wife passed on to their kids topped $1.5 million.
The situation isn't perfect, of course. Some people won't have enough income to make up the intergenerational losses. Others will become overconfident, risk their money foolishly, and lose it. But, by and large, each generation will be able to pass on enough assets to their children to live reasonably well, and isn't that what we all want for our kids?