The 401(k) refers to subsection k of section 401 to the 1978 Revenue Act. The accounts originated after a stalemate between the Internal Revenue Service (IRS) and high-income employees who were receiving large end-of-year bonuses. The IRS wanted to tax this as income, while employees wanted to hide it in their retirement accounts for tax-deferred status. At the time, the top marginal tax rate was 70 percent. Back then, 401(k)s were meant to supplement the pension setup with side accounts, not carry the nation’s retirement system.

A few issues, however, arise with 401(k)s. The accounts offer some prudent tax advantages, but the primary advantage is the employer’s. We were taught to appreciate the 401(k) because the plan usually entails the employer “matching” some small percentage of contributions. I’ve heard some people talking about this as if it were “free money.” A better way to see it is as liminal wages. If you take the plan’s match, that’s money you don’t see in your paycheck, subject to plan options, fees, and liquidity restrictions. If you don’t take the match, that’s money on the table for the employer. Many 401(k) accounts sit empty or close to it because workers need more money up front. But the missing match is nothing more than garnished wages. So, predictably, the upper strata take the match and the middle take the money. Hence the rise of a “401(k) millionaire” class.

But as we can see today, there’s also a problem with taking the match. 401(k) accounts aren’t protected against market crashes, despite their equity exposure. The money in the account is Karl Marx’s fictitious capital. It’s an accumulation of claims on the productive economy, not a hard asset. A lifetime of saving in these accounts can be wiped out in a collapse.

Trying to cash out of a 401(k) in the lead-up to a crisis is a Chinese finger trap: the more you pull, the more you realize you’re stuck. Let’s say you need $5,000 to cover a few months of back rent. Broadly speaking, you need to double the number, so $5,000 cash becomes $8,000–10,000 out of the account; you get penalized 10 percent for withdrawal plus an income tax on the top-line number. For many that will exceed the capital gains tax from personal investments. But you lose twice, because that money had been compounding in your account. Taking a portion of it resets the clock on the new base amount. A $10,000 withdrawal could cost you $30,000 by the time you retire.

The Wall Street Journal calls this phenomenon of withdrawals “Americans raiding their retirement accounts,” when really corporations hollowed them out and sold it back to us as freedom of choice. Exchanging defined benefit pensions for individual 401(k) accounts was a cost-saving mechanism; a fix for stagnating wages amid declining union membership. Selling the move to Americans has involved a demonization of the unaffordability and largesse of the remaining public pensions. A constant churn of articles decries the abuses by teachers and public officials, and exalts “choice” and “personalization” in retirement planning.

The concurrent outcome, unmistakably, is a post-pension generation of Americans obsessed with the stock market and financial speculation. Sociologists call this the “investor subject,” or in Marxian terms the “worker as capitalist.” Employees of the most varied class positions feel pressure to board the accumulation train to supplement massive cost-of-living increases. Simply selling our labor for money is not enough to start a life today, much less a family. When mortgages become unaffordable, the need to put any extra money to use rises.

Essentially, we’re all trying to get ahead without the structures in place to collectively think ahead. The result is sporadic, disorganized yet ad hoc coordinated (r/WallStreetBets) entries and exits from assets, companies, and abstract investments. In 2021, NBA player Josh Hart gave a televised financial lesson on the buying and selling of blockchained basketball highlights. Hart was presented by the New York Times as an avant-garde investor of the League.

Hyperpolitics, a concept put forth by political theorist Anton Jäger, can speak to this moment. It’s hardly new that long-term planning is a luxury for many. But a populace hyper-fixated on an augmented picture of the present has let go of its retirement without much of a fight. The reasoning involves some fusion of a climate catastrophe, postmodern futurism, and the rise of cultural nihilism.

There’s a two-tiered system of financial advice today. Jäger’s hyperpolitics describes a world of increasingly myopic sociopolitical spasms, and this represents the churning attempts to “time the market” or find the life-changing investment. On the other side is the faux financial advice handed down from the managerial class, often high-income workers, on how we should save for the future. They are often the ones maxing out their 401(k) accounts and discussing the “power of compound interest” even for average earners. They channel the wisdom of a century worth of 7 percent average annualized returns on index funds.

What they miss is the political fragility and geopolitics undergirding that assumption into the future. Accumulated history is not a guarantee of the present. James Baldwin called this the “illusion of safety,” a necessary function of society that offers a stable yet fictive future. Iran is currently sending a message regarding the future of American financial hegemony that we cannot sustain a retirement system based on individual bets for a 7 percent return. Russia’s ruble was supposed to be turned to rubble by American sanctions. It was the top global currency against the dollar in 2025. Americans’ ability to stabilize our own national economy by depressing others’ is declining.

The multipolar future could be meaningfully different from the unipolar past when it comes to reliable returns on equities. Goldman Sachs, for one, came out in late 2024 with a “lost decade” prediction for the S&P 500, estimating around 2–3 percent annualized returns.

Much of the stability of past index returns depended on a weaponized global interdependence others shared with the (petro)dollar and American equities. Through decades of mounting sanctions, we’ve been incentivizing others to find new networks of exchange outside of that paradigm. Iran just opened up to oil tanker payments in Bitcoin. And although there is no fast exit route it could very well unwind slowly over time. Risk in this system has been hidden through rising returns year in and year out.

An August 2025 executive order opened up 401(k) accounts to investing in private credit, private equity, and other “alt” investments; incoming legislation will do the same for cryptocurrencies. Every seller needs a buyer. And failing funds need a bagholder. Pension systems were offered these investments a long time ago. Those extend and pretend failures will show up somewhere on their balance sheets soon, but it will not be made public. The accounting write-ups on these investments are deceptive “mark-to-model” not “mark-to-market” calculations. Losses are smoothed out to maintain optimism and avoid what we see today: redemption requests in private credit funds. Democratizing finance traps us in its risk more than its rewards.

Retirement can and should reenter our collective list of political concerns. Just like access to free education, student loan forgiveness, and affordable housing, it is a fight worth waging. A life spent at work should be tied, at least, to the promise of passive income later — and the responsibility for providing that reassigned to those who profit from people’s labor power. Pensions did just that. The 401(k) model, however, has failed on many fronts. Worst of all, maybe, is that it divides us along the lines of those who can afford to save and those who can’t. Many potential opponents to the overreaches of capitalism are transformed into its handmaidens.