The rise of defined contribution accounts has given workers portability, flexibility, and a stake in America’s capital markets.

For decades, pundits have declared that Americans shouldn’t have to save for retirement in the casino of the stock market. They argued that individuals saving for themselves was too risky and that only a strong collective safety net could provide a secure retirement.

Those pundits have been proven wrong.

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.

In the decades after World War II, federal tax policy encouraged employers to offer what are known as “defined benefit” retirement plans, where companies promised to pay set amounts to their former employees after retirement. But in 1974 the government began allowing people to open individual retirement accounts (IRAs) for themselves, with no tax on the contributions. More importantly, in 1978, Congress added what would become the famous Section 401(k) to the US tax code, giving employers the option to support individual retirement accounts.

...

https://thedailyeconomy.org/article/401ks-built-americas-wealth-and-proved-all-the-critics-wrong/