Retirement Retirement Planning

Bernie Sanders Says the 401(k) System Favors Wall Street Over Workers

But he has a solution to fix it.

By Catherine Collins

Edited by Laura Hohenstein

Updated Feb. 24, 2026

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Bernie Sanders, a United States senator representing Vermont, has been vocal about how 401(k) retirement plans benefit Wall Street, not workers. He's been sharing his concerns about how Americans are unprepared for retirement and how many seniors live in poverty. Meanwhile, he points out, Wall Street gets the benefit of earning money from 401(k) plan fees and investment costs.

Here are some of Sanders' views on retirement plans in the United States, along with several solutions he's proposed for the future so that workers can retire with dignity.

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Why Wall Street benefits

Sanders explains that one reason Americans are not prepared for retirement is the shift from pension plans to 401(k) plans. Previously, employers were responsible for providing their employees with pension plans. These pension plans were guaranteed retirement payments regardless of how the market performed.

However, now Sanders says Wall Street benefits because the vast majority of workplaces have shifted to offering 401(k) plans instead. Employees purchase financial products and investments as part of their 401(k) plans, which greatly benefits Wall Street. Additionally, it benefits the firms that help manage the 401(k)s. That's why Sanders says the system favors Wall Street over workers.

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How financial firms earn money from retirement accounts

Many workers don't realize how much they pay in fees to have a 401(k) plan. These plans often have administrative fees, plan fees, advisory fees, and expense ratios. Expense ratios are the management fees attached to the assets workers buy. Sometimes, these expense ratios seem small, like 1% of assets. However, that 1% adds up significantly over time, especially over a thirty-year career.

Financial firms that offer stocks, mutual funds, and more earn money from these fees, and the firms that service 401(k) plans earn money from managing them.

How Wall Street may earn more soon

President Donald Trump recently issued an executive order asking the Department of Labor and the SEC to consider adding alternative investments, like cryptocurrency, to 401(k) plans. However, Sanders and other senators, such as Elizabeth Warren, have strongly criticized this, arguing that it would harm workers. Sanders and Warren are concerned that workers would purchase these investments without realizing how volatile they are, putting their retirement funds at risk. Meanwhile, financial firms would profit from being able to add some of their alternative investments to wide-reaching 401(k) portfolios.

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How retirement plans can favor workers instead

Today, the responsibility for planning a good retirement lifestyle is firmly on workers' shoulders. Although companies do provide 401(k) plans and many offer 401(k) matching programs, the responsibility of setting up a plan, increasing contributions, and investing in specific assets all rests on workers' decisions. This can be really challenging for people because many don't have the experience necessary to make these choices and are afraid to ask for help. This is one of the many reasons why Sanders wants to switch back to primarily pension plans.

Sanders' Solution: The "Pensions for All" Act

The "Pensions for All" Act is a bill that Sanders introduced that would require companies to provide pension plans to workers. Sanders also proposed expanding Social Security benefits. His goal is to help create traditional retirement plans for Americans similar to those of previous generations. By bringing back pension plans, Sanders believes American workers could feel more secure about their retirement. Pension plans are typically offered by companies and provide guaranteed income, whereas 401(k) income is not guaranteed because 401(k) balances can rise and fall with the market.

The fight against inequality

Ultimately, Sanders is against inequality in general. He does not believe there should be such large salary inequalities between CEOs and average workers. He wants to help Americans retire without worrying about stock market dips. This is one of the main reasons why he is in favor of bringing back pensions. Through his proposed legislation and years of experience helping working Americans, he is trying to create a retirement system that benefits American workers more than the current one does.

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Why retirement security matters

Sanders shared that 45% of Americans aged 55 to 64 have no savings. That puts many retired seniors in a vulnerable position, unable to pay for unexpected expenses such as extensive medical bills or major home repairs. However, investing can be complicated, and many people aren't sure which funds to purchase or what would give them the best returns. That's why Sanders is in favor of pensions, as they can provide retirement income without people needing investment knowledge.

Bottom line

Sanders is an advocate for the millions of people who are investing in 401(k) in hopes of having a stress-free retirement. He is not a proponent of adding complex assets to 401(k)s, such as alternative investments. His main goal is to help people retire comfortably and reduce the number of seniors living in poverty. One way he suggests doing this is by bringing back pension plans.

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