For decades, everyday Americans have had easy access to public stock markets but have been largely locked out of private investments. That imbalance has limited growth potential for millions of workers and retirees. Now, the Trump administration is taking steps that could change that – and potentially change the retirement prospects of millions of Americans for the better.
These efforts are outlined in Chapter 12 of the latest Economic Report of the President (ERP), which AMAC Newsline received exclusive access to prior to its release on Monday. To understand why this matters, it helps to start with the basics.
Public investments – like stocks you can buy on the New York Stock Exchange – are widely accessible. Private investments, by contrast, include ownership stakes in companies that are not publicly traded. These stakes are often purchased through private equity or venture capital funds.
In short, private investments have historically been reserved for wealthy individuals and large institutions. But as the ERP explains, that divide has come at a cost for everyday Americans.
The financial world has shifted dramatically since the turn of the century. The number of public companies in the U.S. has dropped by more than half – from 8,800 in 1997 to just 4,000 today – while the number of private companies has surged from 20 million to roughly 35 million. At the same time, private investment funds have exploded in size, growing from $9.5 trillion in assets in 2012 to more than $30 trillion in 2024.
That means a growing share of America’s economic growth is happening outside of public markets – leaving most retirement investors stuck.
The ERP is blunt about the consequences: “Millions of Americans have been deprived of the growth opportunities and diversification benefits of private markets through their DC retirement plans.”
A defined contribution (DC) retirement plan – like a 401(k) or IRA – is a savings account where workers contribute a portion of their income and invest it for retirement, often with help from employer matching contributions. Today, these plans are the primary retirement vehicle for millions of Americans, putting individuals in charge of their own financial future.
As a result, missed opportunities in DC plans are significant. According to the ERP, private equity investments have “consistently outperformed the S&P 500 by 20 to 27 percent over the fund’s life and more than 3 percent annually.”
That’s where the Trump administration’s policy changes come in.
Last August, President Trump signed an executive order titled “Democratizing Access to Alternative Investments for 401(k) Investors.” The straightforward goal of that order is to encourage retirement plans like 401(k)s to include funds that invest in private markets.
Just as importantly, the Department of Labor rescinded prior guidance that had discouraged these types of investments in retirement plans. That guidance had created legal uncertainty and fear of lawsuits, effectively keeping private investments out of reach for most retirement savers.
Together, these actions represent a major shift – and a direct challenge to a system that has long favored institutional investors over everyday Americans.
The report highlights just how skewed that system has been. DC plans now hold about $30 trillion in assets, or roughly 70 percent of all U.S. retirement savings. Yet despite that massive pool of capital, these plans have allocated just 0.1 percent to private markets, compared to about 30 percent for large pension funds.
In other words, the biggest investors have had access to higher-growth opportunities, while ordinary Americans have largely been shut out. For seniors and those nearing retirement, Trump’s policy shifts could have meaningful financial implications.
The report finds that adding even a modest amount of private equity to a retirement portfolio can improve returns while also reducing overall risk through diversification. In fact, the ERP concludes that “all age cohorts benefit from higher risk-adjusted returns” when private investments are included in a portfolio.
That’s a critical point. Many retirees are understandably cautious about risk. But diversification – spreading investments across different asset types – is one of the most effective ways to protect and grow savings over time. Private investments, which don’t always move in lockstep with public markets, can help achieve that balance.
The ERP estimates that expanding access to private investments could increase lifetime retirement income by about 1.3 percent overall. While that may sound modest, it could represent tens of thousands of additional dollars for retirees – without requiring them to save more or work longer. It could also shield near-retirees from bearing the brunt of downturns in public markets that might force them to delay retirement plans.
For younger workers, the gains are even larger, with some seeing increases of up to 2.5 percent over their lifetime.
The ERP also finds that expanding access to private markets could boost the broader economy. By allowing more capital to flow into high-growth private companies, Trump’s policies could increase U.S. economic output by roughly $35 billion. Private companies, especially those backed by private equity, tend to be more productive and grow faster than their public counterparts.
At a time when many Americans are concerned about the stability of their retirement savings, these reforms offer a clear path forward.
For too long, a regulatory framework built around outdated assumptions has effectively walled off some of the most lucrative investment opportunities from the very people who need them most. As the report outlines, only about 18.5 percent of U.S. households qualify as “accredited investors,” meaning the vast majority have been excluded from direct access to private markets.
The Trump administration’s approach flips that model on its head by bringing those opportunities into the retirement accounts that millions of Americans already rely on.
For AMAC members and retirees throughout the country, the significance is hard to overstate. This isn’t just a technical regulatory change buried in a government report. It’s a fundamental shift toward a fairer and more inclusive investment system – one that gives everyday Americans a chance to benefit from the same growth opportunities that have long been reserved for Wall Street insiders.
If implemented effectively, it could mark one of the most important retirement policy reforms in years, helping seniors protect their savings, grow their wealth, and enjoy greater financial security in the years ahead.
Shane Harris is the Editor-in-Chief of AMAC Newsline. You can follow him on X @shaneharris513.
