The country’s economy has evolved in the last 50 years, but Washington’s retirement rules have not. It’s time we change that.
For decades, working class Americans were told to invest their earnings and trust the markets. It’s a reality that has paid dividends for the more than 60% of Americans who own stocks either directly or through retirement accounts like 401(k)s and IRAs.
But the fastest-growing sectors of the American economy remain largely inaccessible to ordinary retirement savers, a reality many policymakers still refuse to acknowledge.
That alone should concern every American preparing for retirement. Private infrastructure, advanced manufacturing, digital assets, real estate, and private capital markets are driving enormous economic growth. Some estimates peg this sector to a staggering $20 trillion. Nevertheless, many middle-class Americans saving through workplace retirement plans are effectively walled off from benefiting from that growth because of the Prohibited Transaction Exemption (PTE 77-4), a federal regulation written during the Carter Administration that still governs large portions of the retirement investment landscape.
It’s a technical regulation that ultimately locks out Americans from having the choice of investing their dollars in these growing sectors. As a result, the gap in financial opportunities between ordinary workers and more established investors like wealthy individuals and institutional funds has widened dramatically, as many individuals are stuck with a narrower menu of options designed for the economy of 1977.
Let’s not forget that Americans already face a concerning financial future when they hit retirement age. Not only are people not saving enough, but millions of Americans, including myself, probably won’t benefit from Social Security despite paying into it faithfully every paycheck. In fact, new projections indicate that the Social Security Trust Fund will be depleted by 2032, triggering an automatic 22% reduction in benefits for every Social Security recipient unless Congress acts.
The Trump Administration has taken the first step in expanding retirement investment options for individuals. In August 2025, President Trump issued an Executive Order focused on expanding access to alternative assets in 401(k) plans. And, just this month, the Department of Labor accepted comments on instituting such a rule to open up this opportunity to the masses.
In a recent interview, Acting Labor Secretary Keith Sonderling recognized the existing inequalities, noting how American families can “literally be in the same household where the husband works as a teacher and is invested in the state pension fund, and it’s completely diversified in private equity, in private credit, in real estate, in the stock market, and then the wife can work at a Fortune 500 company, and the 401(k) is only limited to certain stocks.”
He’s right. The next step is turning the Department of Labor’s commitment into action through the modernization of the Carter-era regulation during a final rulemaking.
Nobody is arguing retirees should gamble their life savings on speculative startups, nor that the government should lower investing standards or weaken protections. In fact, ERISA’s duties of both prudence and loyalty will remain steadfast even if plan fiduciaries gain greater flexibility to consider these investments.
The issue is whether professional fiduciaries should be allowed to evaluate modern investment options based on actual factors like cost, diversification, governance, and long-term value rather than being constrained by arbitrary regulatory barriers written nearly 50 years ago.
As a 30-year-old, my risk appetite might be greater to invest in certain investments because time is on my side. That might not be true for others who are closer to retirement age, like my parents, where the pay-off may not be worth the risk.
While protections can and should remain intact, the regulations should evolve alongside markets. The broader issue here is whether policymakers trust Americans enough to participate fully in the modern economy. At a moment like this, Washington should be expanding opportunities for wealth creation, not limiting them.
America’s retirement system helped build the most prosperous middle class in the world because it expanded ownership and investment beyond the wealthy few. President Trump is calling for investment choice to expand for current and future retirees, ensuring they can participate in the growth of major sectors of the economy, rather than being left behind. It’s a goal National Taxpayers Union is proud to help achieve. The next generation of retirement policy should continue that mission, not freeze it in the past.
