Carrie Sheffield is director of the Center for AI and Technology at Independent Women.
Today’s headlines persistently warn of a widening chasm between the wealthiest Americans and everyone else. But the real story is more nuanced. According to Federal Reserve data, the share of total U.S. household wealth held by the top 1 percent has remained fairly stable for decades, sitting at 29 percent in the second quarter of 2025, compared with 28 percent in 2000.
This doesn’t mean that ordinary Americans aren’t struggling. They are. The 40-year high inflation of the Biden era has receded, but purchasing power is still eroding. And for millions of workers approaching retirement, that means the math is increasingly frightening.
To address these workers’ retirement insecurity effectively, it’s imperative that we recognize an uncomfortable truth: When it comes to retirement investing, the deck is stacked against most American workers. This needs to change, and fortunately, an effort to make that happen is underway.
About half of private-sector employees save for retirement through 401(k) plans, which restrict investments almost entirely to publicly traded stocks and bonds — a universe that has shrunk dramatically.
The number of companies listed on U.S. stock exchanges has fallen by nearly half over the past 30 years. Today, 87 percent of companies with annual revenue exceeding $100 million are not publicly traded at all. The American economy increasingly lives in private markets — and most workers have no access to it.
Wealthy individuals and large public pension funds have known this for decades. They have long invested in private equity, private credit, real estate and infrastructure — asset classes that offer equity-like growth, steady income and returns that don’t move in lockstep with the stock market. These investments have helped public pensions stay solvent and wealthy portfolios grow. Meanwhile, the typical 401(k) holder remains on the outside looking in.
The good news is that the Trump administration is working to level the playing field. The Labor Department has proposed a rule, currently open for public comment, that would clarify and expand access to private-market investments within 401(k) plans. Independent Women is submitting public comment and gathering comment from others in support of this rule.
If done right, this could be one of the most consequential retirement policy reforms in a generation. Though skeptics exist, their concerns are easily mitigated.
The most common concern is that private investments are riskier and will hurt workers. The data says otherwise. Private investments have outperformed the S&P 500 across 5-, 10-, 15- and 20-year periods. Georgetown University’s Center for Retirement Initiatives found that adding just a 10 percent private-market allocation across defined-contribution assets would generate $35 billion in additional retirement savings annually. Adding private markets also diversifies portfolios, reducing exposure to the volatility of public equities — a feature, not a bug, for workers who cannot afford a bad sequence of returns near retirement.
Others point to some public pensions that have struggled, presumably because they include private investments. But this criticism misreads the evidence. The National Association of State Retirement Administrators reports that public pensionswith higher allocations to alternative assets, including private investments, actually achieved higher rates of return. The International Monetary Fund’s 2024 Global Financial Stability Report found that companies backed by private investment experienced lower default rates during periods of economic stress — further evidence of resilience, not fragility.
Finally, some worry about transparency and investor protections. This concern, while understandable, overstates the regulatory vacuum. Private investments already operate under comprehensive frameworks that include quarterly performance reporting, mandatory annual audits and rigorous scrutiny of adviser conflicts. Expanding access to 401(k) plans would bring these investments under additional layers of fiduciary oversight.
Polling consistently shows broad public support for this expansion, with majorities of major demographics agreeing that private investments can help workers build wealth.
The retirement security crisis facing middle-class Americans is real, even if the inequality narrative is overdrawn. Fixing it requires giving workers access to the same tool kit available to public-sector pension managers and wealthy investors.
This is what the Labor Department is planning. Congress should support the proposed rule change. Employers should prepare for it. And Americans saving for retirement should demand it.
The wealthy have long understood that diversification means owning a piece of the whole economy, not just the sliver that happens to be publicly listed. Let’s extend that understanding — and that opportunity — to everyone.
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