Before the 1990s, when more than 70% of Americans received pensions upon retirement, they had far fewer worries about money falling short. Their payments were guaranteed — pensions are called “defined benefit” plans because they pay out a certain, “defined” amount every year. There was less need for retirees to game the stock market to ensure a financially comfortable old age.
Retirees today have much less security. As of 2023, just 15% of private sector workers are offered a defined benefit plan; 67% have access to “defined contribution” plans, such as 401(k)s, but in these plans, only an employer’s payments in are guaranteed — the payments retirees eventually receive are not, since they’re subject to the whims of financial markets.
Defined contribution plans are, at least, protected by strong guardrails. Professionals who give Americans advice about their 401(k)s are subject to what’s known as the fiduciary standard — what Corey Frayer, director of investor protection at the Consumer Federation of America, calls the “iron-clad protection” that financial advisors act in their clients’ best interests.
That mandate, however, does not apply to an array of other retirement investments, such as annuities, which are hawked by brokers who give one-time advice. They are instead subject to a “suitability standard,” which only requires that advisors guide their clients toward what could be considered a reasonable choice — even if they’re pushing those clients toward a product that nets kickbacks or high commissions.
Without the security of a defined payout from a pension, Americans have often turned toward these alternative investment vehicles to help ensure they have enough money for a comfortable retirement.
The shift away from pensions, says Frayer, “creates these incentives to be in other parts of the marketplace that are not as tightly regulated,” where brokers with conflicts of interest may lure retirees into risking their savings.
Ten years ago, I spoke to Phil Ashburn, a former employee of the telecom company Pacific Bell, who found himself pushed into those less regulated markets. After decades of work, at the age of 51, Ashburn was offered a choice: He could take a buyout, retire with his company pension or continue working.
A broker from a financial firm started coming around the workplace and advising Ashburn and his colleagues to accept the buyout and invest their savings with her. In Ashburn’s recollection, she told them: “I could make you rich. You invest money in me, you will make money, you will earn money, you’ll never go broke, you’ll have money to leave for your wife and family when you’re gone, and you can even withdraw money every week.”
Ashburn followed her advice, investing the $355,000 he had saved in his pension and retirement accounts in a variable annuity, which fluctuates based on market performance. About a decade later — when I spoke to him in 2015, for a story in ThinkProgress—he was down to just $70,000 after the stock market cratered during the Great Recession and his own withdrawals to cover his expenses. To make ends meet, Ashburn started a side hustle training dogs, and his wife kept working full time. They stopped taking vacations and rarely ate out so they could pay their bills, and Ashburn still feared that, when his wife retired, they would lose the house they’d lived in for 40 years.
Meanwhile, the broker who talked him and his coworkers into taking the buyout — and who wasn’t bound by the fiduciary duty standard — likely made about $25,000 in broker fees off Ashburn alone.
“My stomach is tied in knots,” Ashburn told me then. “I feel like a failure. They’re shattering the dreams people worked a whole career for.”
To fix this problem, in 2015, the Obama administration’s Department of Labor issued what came to be known as the fiduciary duty rule, changing the Employee Retirement Income Security Act of 1974 to require broker-dealers like the one Ashburn met, who give onetime advice, to also be required to put their clients’ best interests first, rather than their own commissions.
At the time, the Labor Department estimated individual investors like Ashburn were losing an average of 5% to 10% of their retirement savings due to the lack of protections against advice made with a conflict of interest — and, cumulatively, anywhere from $8 billion to $17 billion a year.
After the rule was finalized in 2016, sales of fixed-index annuities plunged as brokers appeared to believe they could no longer push clients toward them.
But the rule was vacated by an appeals court, and the first Trump administration declined to defend it, dooming it to the dustbin. Annuities sales once again soared.
The Biden administration took the mantle back up, dubbing its rule, which was finalized in 2024, the Retirement Security Rule. But the Biden rule, too, has come under fire in the courts and a judge blocked it from taking effect in 2024.
The Trump administration has asked for a series of extensions to weigh in on that court case—requesting a third extension in August — and it’s unclear what it will do next. It recently announced it plans to revisit the rule.
If the Trump administration decides to stop defending or outright eliminates the rule, American retirees stand to lose billions. “Undermining this rule is extremely hard to characterize as in some way beneficial to investors and savers,” Frayer says. “Every time Trump has promised to protect the little guy, the little guy has been able to count on getting screwed.”
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Bryce Covert is an independent journalist writing about the economy. She is a contributing writer at The Nation, and her writing has appeared in the New York Times, New York Magazine, Bloomberg Businessweek, The Atlantic, Time Magazine, Wired, the New Republic and others. She is a 2025 National Fellow at the USC Annenberg Center for Health Journalism and a 2025 recipient of the McGraw Fellowship for Business Journalism, and she was a Reporter in Residence at the Omidyar Network in 2023.
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