President Trump is racking up the wins as he brings financial wealth to Main Street, not just Wall Street.
Whether it’s “Trump accounts” for newborns teaching families about saving and investing or opening new pathways for young people to achieve home ownership, the president’s latest move will empower American workers to ensure they’re building greater financial security for retirement.
Through his executive order last month, titled “Democratizing Access to Alternative Assets for 401(k)s,” Trump will ensure that middle and working-class Americans in the private sector can access private equity for their defined contribution 401(k)s, not just the wealthy elite and accredited investors. Private equity refers to non-public business investments.
“A combination of regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers has stifled investment innovation,” Trump’s order states, “and largely relegated 401(k) and other defined-contribution retirement plan participants to asset classes whose returns lack the very same long-term net benefits allowed for and achieved by public pension plans and other institutional investors.”
Today, as the executive order noted, more than 90 million Americans participate in employer-sponsored defined-contribution plans. As the solvency of Social Security remains uncertain with automatic cuts to benefits a few years away, Trump’s move could create higher returns for workers as they plan for their final years.
Stephen Moore, a Trump administration economic adviser and founder of the Committee to Unleash Prosperity, recently shared the table below, with data from 2003 to 2023, showing that the returns on alternative investments in private equity have outperformed traditional 401(k) investments.
Annual Rate of Return on Capital Market Investments, 2013-23
Private Equity 15%
Public Equity (stocks) 10%
Real Estate 10%
Bonds 2%
Total 401k Average Returns 8%
Source: American Investment Council, 2024.
This data shows private equity far outperforms the returns of the average 401(k) by almost 90%!
Often, defined-contribution 401(k)s for private-sector workers are managed by asset management companies with strict internal company controls over where working Americans can put their money, such as private equity.
Public sector workers have not seen such strict controls on their retirement investments, to the point that today, 89% of U.S. public pension funds invest in private equity, and on average, 14% of their total assets are allocated in this asset class.
“That gap is costing retirees tens of thousands of dollars or more of lost retirement income,” Moore estimated.
No more, thanks to Trump.
We invite workers with questions about what these changes could mean to access our Fact vs. Myth briefing sheet from the Council for a Safe & Secure Retirement, to which Independent Women belongs, along with the 60 Plus American Association of Senior Citizens, the National Black Empowerment Council, and the National Taxpayers Union.
Former President Biden and his allies on the woke left tried to hobble and degrade the returns of 401(k)s through investing in the so-called “Diversity, Equity and Inclusion” stipulations for Environmental, Social, and Governance (ESG) investing.
These mandates would, for example, strip out retirement investments in oil and gas companies in order to pursue Green New Deal mandates that were unscientific and irrational.
Thanks to Trump’s leadership, the reverse is happening: Americans can now access promising investments that can help them secure a stronger retirement for themselves and a brighter legacy for their future generations.