401(k)s Built America’s Wealth and Proved All the Critics Wrong: The rise of defined contribution accounts has given workers portability, flexibility, and a stake in America’s capital markets. (Judge Glock, December 24, 2025, Daily Economy)
A recent Wall Street Journal story highlighted the hundreds of thousands of “401(k) millionaires” just at the Fidelity brokerage. Far from being a refuge just for the wealthy, individual retirement accounts have become a widespread and secure way to save for retirement. They have also become one of the main reasons for America’s national wealth. […]
Around the time of the 401(k) tax code change, there were about 30 million defined benefit plan participants in the private sector, an all-time peak. That was nearly double the total in “defined contribution” or individual retirement plans, such as the 401(k).
Today, the number of active participants in defined benefit plans is down to about 10 million, but there are almost 90 million in defined contribution plans. Thanks to 401(k)s, the total number of workers with any retirement plan is at an all-time high, even accounting for population growth. […]
Despite periodic cries about a retirement crisis, people with the option to save for retirement are saving a lot. Fidelity estimates that people with 401(k)s are saving over 14 percent of their income in them, including both employer and employee contributions. The median retirement savings for the recently retired is $200,000, which helps explain the all-time record net worth for this group. The amount of savings will go up as more people retire who only know of defined contribution accounts. The number of people with individual accounts at middle age is actually higher than it is for older groups.
Beyond the benefits to individuals, there are social benefits to individual retirement accounts. In countries with more expansive collective safety nets and social security, most people don’t have to save as much for retirement. Although for some individuals that could work out fine, for society as a whole, it can be devastating.