bUt ThAt's PeOpLeS ReTiReMeNT!

Whenever financial markets have a little whoopsy 

daisy and require government intervention to prevent further losses, there is one line that 

is repeated more than any other. Today's historic action will provide new retirement security to 

countless American workers and their families. The troubles of the last few years has forced millions 

to put retirement on hold indefinitely. It's even forced some to cut their retirement short and 

reenter the workforce. And since I took office, the stock market has more than doubled, 

replenishing the 401ks. buy some stocks and they go down big, you got that paycheck coming. It's 

only older people who are further down the line who don't have enough paychecks left. Americans 

401ks and retirement savings are booming. Yeah, that's right. We can't let the consequences of our 

own actions go too far because the retirement of millions of regular people are directly dependent 

on the performance of these financial assets. And well, they kind of have a point. Since the year 

2000, the number of people actively contributing to investment-based retirement accounts has 

more than doubled over the same time in which defined benefit schemes have more than hald. 

At the end of last year, here in America alone, we collectively had almost $50 trillion worth of 

assets tucked away into retirement accounts with all but 13 trillion of that being directly tied to 

the performance of financial markets. That is only slightly less than the collective value of our 

entire residential real estate market. And voters are equally defensive of it. People don't want 

their homes to lose value. And likewise, they want to make sure that at the end of their careers, 

they will have something to retire on. But this logical self-interest has created some perverse 

incentives for the entire financial industry by making hopeful retirees the ultimate bag holders 

for when things start to go wrong. Whether it's private credit, private equity, BDC's, mortgage 

back securities, or residential REITs, if there is an asset that is starting to go bad, then this 

practically unlimited pool of cash has become a great escape mechanism to bail out flailing 

sectors because they know that if anything goes wrong, the government will be there to bail them 

out in turn. This has created a weird scenario where retirement savings must simultaneously 

be protected at all costs while also taking on morally hazardous amounts of risk. It's not great, 

but at the very least, it has empowered people to take charge of their own financial destiny, right? 

Well, we will get to that after that. We also need to address some good news, which is that America 

is far from the worst offender in this whole game. Raising concerns about the security of her workers 

retirement portfolios, President Trump signed back in August, which directed regulators to expand 

access of 401ks, allowing retirement plans to include alternatives. So if that goes down then 

uh what they can pay on a monthly basis goes down. Cryptocurrency, real estate, the private market 

assets as well. Ensuring Americans hard-earned savings are invested in a sensible manner. If 

we're right, people lose homes, people lose jobs, people lose retirement savings, people lose 

pensions. Okay, so one of the most difficult parts about addressing this issue is that it's very hard 

to criticize the system of retirement savings we have without sounding like we are criticizing 

the idea of saving for retirement at all. As an individual, if you have the spare money at the end 

of the month, you absolutely should be saving and investing that excess to fun financial objectives 

with what is hopefully a nice long comfortable retirement being towards the top of that priority 

list. What's more is that as an individual, if you can take advantage of tax advantaged or employer 

supported accounts like a 401k, IRA, or your home country's equivalent to make those savings and 

investments go further, you absolutely should do it. In the interest of transparency, I personally 

try to max out my allowable contributions when I can. Partially because it's good financial 

discipline and partially because Mr. Bagel would descend from Canada to slap me over the head if I 

didn't. But doing a sensible thing inside a broken system does not make the system itself sensible. 

Over the last four decades in particular, saving for retirement has changed a lot more than most 

people realize. For most of the post-war period, retirement in America was built on three things: 

social security, a company pension, and whatever personal savings you had managed to set aside on 

top of them. For most people, any combination of the first two felt very secure, normally with 

the third as a nice little bonus. your employer legally had to stand behind that pension and 

social security had just survived a world war. Almost none of that is true anymore. In 1980, 

around 60% of private sector workers with any retirement plan were in a defined benefit pension. 

Today, fewer than 15% are, and most of those are made up of senior employees at very traditional 

companies that have literally been grandfathered in, or specific government employees. Almost 

all of them have been replaced with the 401k, a tax advantaged investment account offered 

through your job. You contribute a slice of your paycheck before tax. Your employer sometimes kicks 

in a bit as a perk, and the whole lot sits in a menu of mutual funds until you retire. For the 

sake of technical correctness and completeness, the equivalent for nonprofit and educational 

workers is a 403b. For state and local government workers, it's a 457b. For federal employees, it's 

the Thrift Savings Plan. But functionally, they're all more or less the same thing. For anybody whose 

job doesn't offer any of the above, the backs stop product is the IRA. Basically, a 401k without 

the employer attached. All of these share one extremely important feature. They are defined 

contribution plans. They define what you put in. They do not define what comes out the other 

end. What comes out the other end is whatever the market decides to hand you on the day you need 

it. For better or worse, that is a very different deal from the old defined benefit pension where 

your employer was legally obligated to pay you a fixed amount for the rest of your life regardless 

of what markets did. And well, that shift from the employer owes you to you own a pile of stocks 

and cross your fingers was not an accident. The 401k started life as a weird little clause in the 

1978 tax code meant to give high-ranking senior corporate executives a tax break on deferred 

compensation. It got turned into a mass market retirement product in the early 1980s because it 

was cheaper for companies to offer, moved all of the investment risk onto the worker, and could 

be sold as empowerment. And it worked. According to data from the Investment Company Institute 

in the Federal Reserve, American Retirement Accounts held $49.1 trillion at the end of 2025, 

broken up between these various accounts. Now, beyond just simply being an enormous pile of money 

for the financial industry to play around with, this growing asset class has exactly the right 

combination of financial characteristics to make it a tax advantaged complacent bag holder that has 

ironically probably made retirement more difficult for average people for four distinct reasons. 

So, it's time to learn how money works to find out who actually benefits when politicians line up 

to protect people's retirement. And spoiler alert, why it isn't you. If you've watched this channel 

for any amount of time, you already know that most businesses do not actually care about your 

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in my description. Okay, so the first problem and the one all the others get to hide behind is 

that retirement accounts have quietly become the perfect bag holders. On paper, they are an 

extremely well- behaved pool of capital. 401ks and IRA both carry a 10% early withdrawal penalty on 

top of regular income tax, which means most people don't touch them until their late 50s at the 

absolute earliest. That gives the funds managing them two things Wall Street genuinely loves. An 

extremely long investment horizon and extremely predictable liquidity needs. The fund manager 

doesn't have to worry about a flood of people asking for their money back tomorrow, which is 

perfect for owning illquid assets like commercial real estate, private businesses, and private loans 

that are all very hard to sell quickly. These funds are also enormous, which means they can get 

into deals that most individual investors couldn't access even if they wanted to. On top of that, 

the fund managers running them are compensated for hitting steady returns inside a narrow risk 

band. And on top of that, most of the actual humans whose money is in these accounts have no 

idea what they are invested in, what the fees are, or what the real risks look like. Put all of that 

together, and you have a customer that is captive, enormous, patient, oblivious, and politically 

impossible to let down. Because of this, more complex and illquid products have actually 

become more desirable because they simultaneously make it look like intermediate fund managers are 

justifying their own existence. But it also makes day-to-day price shocks harder to recognize as 

compared to something like a stock portfolio that has market pricing information updated 

thousands of times a second. We saw a version of this with mortgage back securities in the leadup 

to 2008. Pension and retirement funds were quiet, but also enormous holders of the tanches that blew 

up. More recently, it's been private credit and BDC's being aggressively marketed into target date 

funds. And now after last year's executive order, the big push is to make private equity and crypto 

products directly accessible to every 401k plan in the country. The same trillion dollar private 

credit industry that has started to run out of good borrowers looking at a $14 trillion pile of 

captive 401k money and seeing an exit door. And it all works because whoever gets to hold that 

money also gets to hide behind the phrase that's people's retirement when things start going wrong. 

Now, to play devil's advocate, this wouldn't necessarily be a problem if people actually 

paid attention to where the retirement was being invested and were willing to accept those 

risks. But this issue also needs to be considered alongside the other problems with treating 

retirement savings as an endangered species that must be protected at all costs. So, yeah, the 

second problem might not be that shocking to you, but it still needs to be considered, and that is 

that retirement savings held in these advantage accounts are overwhelmingly held by already 

very wealthy households. According to the Federal Reserve's most recent survey of consumer 

finances, the top 10% of American households hold the overwhelming majority of all retirement 

account balances. The top 1% on their own hold more in these accounts than the entire bottom 

half of the country combined. And to be fair, that bottom half of households have on average 

basically nothing in dedicated retirement accounts at all. The point is that when a politician says 

we have to do X because that's people's retirement at stake, the retirement actually being defended 

belongs overwhelmingly to people who are going to be fine anyway. The phrase people's retirement 

sounds like it is defending a plumber 3 years away from clocking out for the last time. In practice, 

it is defending the ancillary portfolio of someone who statistically already has a healthy base 

of personal wealth. Now, for what it's worth, this breakdown of retirement savings is actually a 

more equitable distribution of wealth than direct stock ownership, which skews even harder to the 

top. This is often used to highlight the power of these accounts to make long-term investing more 

equitable across all workers in the economy. But this still has some problems. For one thing, 

being slightly more equitable than regular equity holdings is not exactly a ringing endorsement. 

The second thing is that the households with a majority of these assets held in retirement 

accounts are largely the same households holding a majority of directly held assets as well. So 

really instead of bridging the gap, it's adding further distance between these percentiles. And 

finally, well, you may be personally fine with this kind of inequality of asset ownership. At 

the end of the day, we do live in a theoretically capitalist free market economy and some level 

of inequality is just inherent in that system. But the difference is with regular asset markets, 

their inequality isn't tax advantaged. So yeah, problem number three is that because these are tax 

advantaged accounts, every dollar going in is a dollar that gets omitted from government revenue. 

And this is not a small issue. According to the joint committee on taxation, retirement account 

related tax breaks cost the federal government $383 billion in fiscal year 2025. This is a cost 

that is much harder to see because it is emitted revenue that just never comes in rather than 

a budget line item that comes directly out of the Treasury. But to put that into context, $383 

billion is more than the federal government spends on SNAP, unemployment insurance, child nutrition, 

and federal family support programs combined with enough left over to fund NASA as a cherry on 

top. To address this even more directly, it is also enough to just cut a $7,000 annual check 

to every single American over the age of 67. Now, obviously, that is not going to fund a retirement 

by itself, but it would be a serious top up to Social Security for every senior regardless of 

whether they had spent a career maxing out a 401k or not. Now again to play devil's advocate here, 

the argument is that these tax breaks encourage regular workers to save, which takes pressure 

off the governments to support them later, which might actually be a decent argument if the 

tax benefit was spread evenly. But by combining problem two with problem three, it really isn't 

because the tax break scales with how much you can afford to contribute, and that scales with 

how much you earn. The vast majority of that $383 billion flows straight to people who were going 

to be financially comfortable in retirement either way. Of course, there are extreme examples of this 

like Peter Teal compounding billions of dollars worth of Facebook stock in his tax advantage 

Roth IRA. But more broadly, the majority of these advantages go to people who just don't really need 

them. It is a subsidy that gets sold as protecting the working class. It is in practice a transfer 

to people who can already afford to invest even without the tax breaks. Now, on top of that, 

there is the argument that a private sector funded retirement is simply more efficient than a 

bloated government system without a profit motive. But the alternative is not exactly flawless 

either. Just because they have a profit motive doesn't mean it's your profit motive. Privately 

managed retirement accounts currently pay out tens of billions of dollars every year in management 

fees to the financial institutions moving all that money around. An exact number is hard to find 

because the financial sector surrounding these retirement accounts is so massive. But a report 

by McKenzie estimated that roughly $84 billion in fee revenue could be directly attributed 

to direct contribution retirement accounts in 2024 alone. Those are all expenses that are not 

going to fund anybody's retirement, let alone the people that really need it. But even this is 

not the real problem. The real problem is that this whole arrangement was sold on one specific 

premise. It put people's financial destiny back in their hands. They are the ones taking the risk. 

They are the ones investing in markets. They get the upside. And yes, sometimes they will have to 

eat the downside. Again, to be clear, there is a certain appeal to having control over your own 

finances and not relying on an employer to pay you out a fixed monthly stipend. But that premise 

is uh being honored very unevenly. Because the fourth problem, and the one that ties this whole 

system together, is that the people using these accounts are not actually being allowed to take 

the risk they are supposedly being rewarded for. Every time a sector of the financial industry that 

retirement funds have heavily piled into starts looking wobbly, the government steps in. Sometimes 

it's direct bailouts. Sometimes it's emergency liquidity. Sometimes it's quiet regulatory 

forbearance. Sometimes it's the Fed buying up an asset class that was never supposed to be its 

problem. In every case, taxpayer resources get deployed to keep something propped up because 

letting it fail would hurt well people's retirement and protecting Americans and their 

retirement accounts. This new bill would make it easier to save for retirement. Second panel 

will focus on protecting social security forever and strengthening retirement security for all 

Americans. That is not strictly speaking private enterprise. That is a private investment account 

with a public guarantee. quietly tacked onto the back end by political pressure. And the guarantee 

doesn't only show up as bailouts. It also shows up as red tape being cut, worker protections 

watered down, consumer protections weakened, and antirust enforcement going quiet. All under 

the same argument. If we make this industry play fair, it might get less profitable, which might 

hurt stock prices, which might hurt 401k returns, which might hurt people's retirement. That 

was an incredibly effective lobbying tool, which is how you end up with a 20-year stretch 

where corporate profits hit record after record, wages stagnated, housing got unaffordable, health 

care costs exploded, and every attempt to regulate any of it got batted down by the same line. 

For the vast majority of Americans, stronger worker protections, genuine consumer rights, and 

a housing market that isn't an asset class first would be worth enormously more than a few extra 

basis points on a retirement account they mostly don't have much in. But the basis points come 

with the lobby. The protections do not. Now, the one piece of genuinely good news in all of this is 

that America is not even close to being the worst offender. Australia, for example, has a mandatory 

retirement scheme called superanuation, where a percentage of every worker's paycheck is legally 

required to go into a private investment account. that has given Australians the highest per capita 

retirement savings on the planet and also a pool of private capital so enormous that the Australian 

government now treats it as a kind of general purpose piggy bank. If the Australian economy 

is known for one thing, it is most likely its incredibly unaffordable housing market. But that 

market could only get so bad because Australian banks were willing to lend so much. And they were 

only willing to lend so much because they were so well financed. And a big part of the reason why 

they are so well financed is because Australia's enormous pool of retirement savings funnels a 

lot of that money into these institutions either directly through bond holdings and deposits 

or indirectly through equity. Data from the Australian Bureau of Statistics suggests that out 

of every dollar that gets put into these accounts, 27 cents gets directed towards the country's 

banking sector, which is in turn heavily focused on residential real estate mortgages. or when that 

isn't direct enough, these superanuation funds have also just cut out the middleman entirely 

and started investing in single family homes themselves. In plain English, a large part of 

their infamous housing problem is funded by and it is currently funding the tax advantage retirement 

of primarily wealthy investors. It sounds bad, but it has also become a strange emergency fund 

for all the wrong reasons. Young Australians can now access the retirement savings to put a deposit 

down on a house, further adding tax deferred fuel to that particular dumpster fire. Australians were 

allowed to withdraw tens of billions from their superanuation as pseudo stimulus during CO. And 

just this week, the Australian government quietly announced it would be tapped to help finance 

expanded military spending. So the good news, such as it is, is that we have not yet reached 

the point of using 401k balances to directly fund defense procurement. We are still just using it to 

bail out private equity. Which brings us back home and to the uncomfortable bit. The obvious fix for 

all of this is actually not that complicated on paper. Stop letting the riskiest possible products 

into tax advantaged accounts. Means test the tax breaks so they stop being a handout to people who 

are going to be fine already. And stop accepting that's people's retirement as an automatic veto on 

any policy that might force Wall Street to behave or companies to face consequences. Now, this is 

normally the part where I say there wasn't some grand conspiracy behind all of this. It's just a 

broken system of people following their own best interest. But well, that actually might not be 

the case here. Convincing people that they are not workers or consumers, but rather investors, 

and therefore what was good for business was good for them was one of the central focuses of a 

document you have probably never heard of written over 50 years ago. But go and watch this video 

from our other channel, How History Works, to find out how it reshaped the modern corporate landscape 

of today with a level of accuracy that was clearly beyond just coincidence. And don't forget to like 

and subscribe to keep on learning how money works.