The Quiet Push to Reshape Your Retirement Savings
Peter Reagan

For most of the 20th century, retirement in America followed a simple model.

You worked for decades, usually for the same employer. Not least because most employers offered a pension. And when you chose to retire, a monthly check arrived like clockwork. The specific amount was based on your pay and years of service. And it was a known quantity – you knew "If I retire next month, I'll get a check for exactly $951 for the rest of my life." So this was a good deal for workers (and by "workers" I mean factory laborers, management – pretty much everybody who isn’t an owner).

Pension fund managers were able to pool the risks of returns, longevity, and volatility across millions of workers. Like big insurance companies that manage tens of billions in assets, pension fund managers were more or less experts in financial risk management.

Then everything changed.

Beginning in the 1980s, companies steadily replaced "defined-benefit" retirement plans like pensions. Even though pension funds were expert risk managers, the companies footing the bill saw their workers' retirements as a big, ongoing expense. Why should they have to worry about their former employees' income when they'd stopped working? Congress introduced 401(k) plans, and companies switched in the thousands.

We're familiar with 401(k) plans. Rather than paying guaranteed income in retirement, most workers today get something very different: An investment account.

Before this big shift, the NBER tells us less than 10% of Americans participated in financial markets. Today, more than 2/3 of us have our retirement hopes and dreams pinned to the markets.

Almost overnight, we turned millions of workers into part-time money managers (on top of their real jobs).

The great retirement experiment

The shift from pensions to 401(k)s was often framed as empowering workers. Individuals could now choose how much to save and how to invest their retirement funds. (That their employers saved a lot of money by not funding and managing pensions wasn't widely discussed.)

This change shifted a tremendous amount of responsibility onto individuals.

For most Americans, the 401(k) became the central pillar of their retirement planning. Instead of professional pension managers pooling risk across large groups, each household suddenly had to answer difficult questions on its own:

• How much should I save?
• What should I invest in?
• When can I safely retire?
• How much can I safely spend once I stop working?

These aren't easy questions to answer for expert financial planners, let alone for everyday families who don't make a study of financial markets. 

Why the financial industry loves the 401(k)

The rise of 401(k)s transformed the financial industry.

Millions of workers who once relied on pension plans now had individual retirement accounts. Each of those accounts needed investment products. And the financial industry creates investment products, packaging and repackaging underlying assets. Today, there are over 140,000 different financial products available to the individual investor. Yes, that's FAR more than the total number of underlying assets. 

In effect, the 401(k) created millions of customers for the financial industry. And they profited greatly, according to Harvard Business School. Since the shift to 401(k)s, the financial sector has expanded five-fold (and profits have risen about 50%). 

But something interesting happened over the past decade. Growing pressure on the financial industry limited their profits (after all, every dollar of profit is one less dollar in an American saver's retirement account). Thanks to rule changes in 2016 and 2018, most 401(k) plans offer at least a few very low-cost options. 

That trend has been good news for savers.

But it has also meant that the financial industry's profits have shrunk.

The new push toward private investments

Now a new idea is gaining traction inside the financial industry: bringing private-market investments into retirement accounts. President Trump signed an executive order in August 2025, "Democratizing Access for 401(k) Investors," for exactly this reason. These new assets include things like private credit, private equity, and other assets that do not trade daily on public markets.

Supporters argue that these investments could offer higher long-term returns and access to opportunities that traditional funds may miss.

But private investments come with a number of important trade-offs.

They are often illiquid. That means investors must commit their money for years before they can withdraw it. For large pension funds, that kind of lock-up can make sense. Pension funds have predictable cash needs and can plan decades into the future. But for individual investors, the situation is different.

People may need access to their savings at unpredictable moments – whether because of health issues, family needs, or sudden changes in life circumstances.

Private investments simply aren't regulated as aggressively by the SEC. They don't have to publish the same kinds of information as public assets. That makes them much harder to value. In fact, most private assets don't regularly publish a price.

Now, there may be some genuine reasons for this. Take your home, for example. You don't need to know its market value on a daily basis. Its value only really matters when buying, selling or insuring it. Homes are a good example of a widely-owned but illiquid asset. (Learn more about liquidity here.)

However, when it comes to your home, you know exactly what you own. That same level of transparency simply doesn't apply to most private assets, and that's a real concern. For example, Reuters recently published a column that suggested private credit isn't ready for mainstream investors simply because it hasn't survived a full stress test yet.

In addition, private investments are hugely profitable for the financial services industry. According to the Bank of International Settlements, they collect 6-8 times more fees than on traditional assets. That gives the industry a very clear motive for pushing their products.

What this means for everyday American families

For individuals planning their retirement, the lesson is not that new investment products are inherently bad.

But it does highlight an important principle: The more complex retirement products become, the harder it can be for individuals to understand exactly where their savings are invested. How much they're actually worth at a given time, and how quickly they can access those funds if they need them.

Many Americans prefer to balance financial assets with holdings that are simpler and easier to understand. That is one reason why physical precious metals play a role in diversified savings strategies.

Unlike many financial products, physical gold and silver are tangible assets that exist outside the financial system. If you're concerned about complexity and long-term financial stability, that simplicity is just one of the many benefits of diversifying with physical precious metals.

Over the past forty years, Americans have already lived through one major retirement transition – the shift from pensions to 401(k)s. I'm not entirely convinced that was beneficial for us. And now the financial industry appears to be exploring yet another change in our retirement savings. As those changes unfold, the most important question remains the same: How much control do we truly have over our own savings?

I believe the answer involves diversification with tangible assets that sit outside the financial system. If you'd like to learn more, I invite you to explore the benefits of physical gold.

 

 

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.

 

www.birchgold.com