The retirement crisis was never designed to end under the monopoly capitalist system. Financially unstable workers are good for political management.
For nearly 50 years, I have written about retirement. It is not a glamorous subject in financial journalism, and many financial and investment reporters prefer to cover leveraged-derivatives stars and quant traders using secretive, exotic strategies.
That’s perfectly understandable. But those strategies have no impact on the retirement security of millions of Americans, most of whom are in the middle to lower end of the income distribution.
It’s true that since the signing of ERISA on Labor Day 1973, the law has changed the entire industry. In essence, ERISA professionalized and injected accountability into the people managing pension assets.
Prior to ERISA, plan administrators thought they were doing a good job if they invested the assets in a bond fund and rolled them over as they matured. Insurance companies managed pension funds by buying real estate to mimic retirees’ cash flows. In some states, it was illegal for pension funds to invest in the stock market. The era of modern investment management had not arrived. But ERISA laid the foundation for linking financial theory with retirement plan practices. This led to the introduction of Modern Portfolio Theory, the quantification of risk (diversifiable and non-diversifiable), portfolio diversification, and asset class correlation. All this led to the creation of more specific and focused pension plan policy statements.
ERISA sets key provisions in its 248 pages. It set new standards covering the granting, operation, and administration of pensions. It imposed behavioral standards and fiduciary standards. We don’t hear much about fiduciary standards in the Trump regime, but at one time they were a real thing, like the Emoluments Clause. But all of that is forgotten now.
ERISA federalized pension law. In the process, it replaced all state laws covering pensions. In its place, workers in all states had recourse to federal pension laws. Retirement plans have shifted from defined-benefit to defined-contribution. That meant the end of pension plans, and the shift of all investment risk to ordinary people who are unqualified to make long-term investment decisions over the course of their lives.
But most retirement reporters don’t know the history of ERISA, which has been called the most complicated piece of legislation since Social Security was passed in 1935. What made ERISA so complicated?
Look at the industry forces involved: insurance, investment, consulting, actuarial, unions, old-line business lobbying groups, anti-union employers, Black groups, labor and corporate lawyers,
Mandatory enrollments and education about making regular, maximum contributions to 401(k) plans have helped increase the size of retirement accounts, but studies show that most average Americans do not think they have enough for a comfortable retirement.
This story has been repeated multiple times per year, for years, by intelligent, well-meaning editors of investment publications.
But the editors don’t have a sense of history. Otherwise, they would not let reporters write the same story every year using updated numbers and studies from new sources.
What the editors and reporters who write retirement stories lack is a political framework.
Retirement insecurity is built into the monopoly capital system. This political framework is uncommon in newsrooms, where the prevailing political philosophy holds that free-market capitalism is the foundation of the Western world.
But unregulated capitalism only produces more inequality and chaos and fuels the friction between classes. Yes, the US has economic classes beyond d the top 1%, and it’s safe to say that the bottom 99% of working Americans are dissatisfied, to whatever degree, with the system that produces trillionaires and a record number of billionaires, who flaunt their wealth and leave little in trickle-down economics for the bottom 99%.
So, with that as a backdrop, here is the latest news that only buttresses the fact that the retirement crisis is intentional and will always be perpetuated under the current economic system.
The goal of the retirement crisis is to put the working class into a perpetual state of insecurity. A financially insecure workforce is a gullible, pliable one. An insecure workforce is ideal for propaganda and demagoguery.
If this sounds familiar, it should.
The economic reasons for the corrupt Trump regime have their basis in economic inequality more than culture wars about transsexual athletes, immigrants stealing jobs from Americans, sex change operations at elementary schools, and hordes of immigrants who are eating cats and dogs.
The more intelligent explanation relies on economic inequality, the perpetual need for kinetic consumerism, becoming a slave to credit rating agencies, and trying to stay in one place while running on the expenditure treadmill.
In case people did not notice, capitalism is very creative at tapping into and confiscating the hidden sources of wealth and savings of average workers.
Among these predatory industries that are now in full operation are borrowing against a life insurance policy, borrowing against the equity in your home, online betting, investing in crypto, earning extra cash in the home porn industry (OnlyFans, porn sites), financing small purchases on Amazon, fractional ownership of stocks when buying an individual share is too expensive, high-interest loans to car buyers, online sports betting, payday loans, credit card consolidation programs, and an array of online lender who are essentially offering juice loans.
So, with these contemporary industries as a backdrop, it’s no wonder the latest bad news about retirement cites new statistics and sources, but it is essentially the same old story. It’s also one we will be hearing for years to come unless some skeptical editors take the time to see that unregulated capitalism requires an insecure, dependent workforce that is too preoccupied to take corrective political action.
How Bad—or Good–is the Economy?
That’s a huge question with no answer.
The country now has a range of people, from trillionaires to those living on food stamps, so it obviously depends on who is being asked and who is doing the questioning.
For financial reporters who rely on rigorous studies from well-recognized, credible investment firms, the latest report from Vanguard offers some answers indicating the economy is not good for more people in need of emergency funds.
The latest news, as reported by Bloomberg, is the following:
- “A record 6% of participants in 401(k) plans administered by Vanguard Group Inc. made hardship withdrawals in 2025, with about two-thirds of the funds used to avoid home foreclosure or eviction or to cover medical expenses.
- “Roughly half of participants who tapped their accounts in 2025 did so more than once, while 21% made three or more such withdrawals, often at a high cost for savers younger than 59 1/2.”
Any record in the investment industry shows a new trend line point, and if the number of 401(k) withdrawals from working people is making hardship withdrawals from only one firm (Vanguard), we can assume this number is much higher if this withdrawal data could be obtained from hundreds of the nation’s other huge fund firms.
The hardship withdrawal is being applied to existential life events, such as eviction and a medical emergency.
But when workers reduce their 401(k) balances and don’t repay them immediately, how does that impact their savings rate over time?
According to the IRS, there are three main consequences before taking a hardship distribution from a 401(k):
- The size of the distribution will permanently reduce the amount you’ll have in the plan at retirement.
- Workers must pay income tax and a 10% penalty right as soon as the withdrawal is made. Workers also pay a tax on any previously untaxed money they receive as a distribution.
- Some workers may also have to pay an additional 10% tax, unless you’re age 59½ or older or qualify for another exception.
- You may not be able to contribute to your account for six months after you receive the hardship distribution.
There is also something called “opportunity cost.” This is the loss that when you withdraw the money, you are out of the market. As a result, you lose the benefits of stock appreciation and the benefits of compounding on your portfolio balance.
This is a significant amount of money over time. As an example, if you are 40 years old and withdraw $25,000 from your retirement account and your investments earn an average 7% annual return, that $25,000 could grow to over $100,000 by age 65, or over 25 years. That’s $75,000 in potential growth lost if the withdrawal is not repaid.
This is the unavoidable scenario you get from a financial planner.
But this does not explain why there are a record number of hardship withdrawals from an economy that Trump says is “the best in history,” but of course, he is only referring to the top 1%.
The Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit for the first quarter of 2026 found that the overall delinquency rate on consumer loans in the first quarter matched the highest level reported since 2017.
There is even more bad news for workers from the Apollo Academy. According to Apollo, in 2010, the median age of all US homebuyers was 39. Today, it is 59. Since owning a home is the most recognized wealth engine for Americans, delaying a home purchase until age 59 means there is less time to build home equity if the person retires at age 65. Those six years are not going to build enough home equity to supplement Social Security and 401(k) savings if a person wants a comfortable, stress-free retirement.
The problem with writing stories about hardship withdrawals, the negative impact of delayed home purchases on retirement, is that nothing is improving for average workers.
The financial news is conditioned to write all about affordability, rising inflation, unemployment, the impact of AI on future job security, and higher living costs. But all this lacks context.
There is never an upbeat report on the financial situation of millions of average Americans because there is nothing great to report.
The problem with the financial news is that it lacks perspective. No Marxist, progressive, or liberal economic perspective is applied to any of these reports.
The financial news often lacks a broader perspective. These reports rarely incorporate Marxist, progressive, or liberal economic frameworks because many reporters, editors, and media owners support unregulated capitalism. Too many journalists also assume that regulation inherently hinders capitalism.
As a result, the U.S. has entered the phase of monopoly capitalism, in which large corporations and private equity firms absorb competitors across industries. Both political parties have largely supported efforts to avoid antitrust enforcement and regulation, and that decline in competition ultimately harms average consumers.
If people doubt this, listen to interviews with the chairmen of major banks (Citicorp, J.P. Morgan, Bank of America), and they address average Americans as consumers. They are never addressed as “citizens” or “voters,” but as consumers.
Politicians adopt this same perspective. Average Americans living in the most advanced consumer society in history are just buyers of goods and services. They need a constant flow of money, the more the better, to keep fueling the consumer society. If they are given a choice between saving for retirement and immediate spending, politicians, corporations, and bankers insist they should spend more of their disposable income now rather than save for the future.
Saving for retirement is a future need. The need for a consumer economy is immediate. Today is best; tomorrow is acceptable. But decades into the future is not allowed. That would jeopardize next quarter’s profits and earnings, which affect the corporate bottom line and the CEO’s bonus.
So, when we see an increase in hardship withdrawals from average workers from their retirement accounts, this bad news for individual families is not as important to the people who run the consumer society as the spending power, however diminished it becomes, as long as it is spent immediately.
That’s why the retirement future of average Americans is always in jeopardy. It’s a chronic victim of unregulated capitalism that drives a consumer society. And that system is antithetical to the well-being of millions of average Americans.
The financial press should acknowledge this flawed situation. Then they should assess how this myopic political perspective taints their daily reporting and prevents them from seeing the real problems that underlie their stories.
