In 1980, 38% of private sector workers had defined-benefit pensions (employer guarantees retirement income). By 2020, that number was 15%. The 401(k) — originally designed as a supplemental savings vehicle, not a pension replacement — became the default retirement system.

The shift transferred: investment risk (from employer to employee), longevity risk (outliving your savings — from employer to employee), and management responsibility (from professional pension managers to individual workers with no training). This happened because it was dramatically cheaper for employers and created a massive new pool of assets for the financial industry to manage (and charge fees on).

The 401(k) system manages approximately $7.7 trillion. Target-date funds (the most common default option) charge 0.10-0.70% annually. The asset management industry earns $20-50 billion per year in fees from retirement accounts. The shift from pensions to 401(k)s didn't just transfer risk — it created one of the largest profit centers in finance.

Required Minimum Distributions (RMDs): at age 73, you must begin withdrawing from tax-deferred accounts (traditional 401(k), IRA) and pay income tax on withdrawals. The government deferred tax collection during your working years and now collects it in retirement. If you don't withdraw enough, the penalty is 25% of the shortfall. The system is designed so the tax bill comes due eventually.