Tax-advantaged employer-sponsored retirement savings accounts hit a milestone not long ago: At least half of all private sector U.S. workers now participate in a 401(k).

That is good news in this respect: The alternative of not saving money for retirement could prove crushing. Finance experts have long cautioned against relying solely on Social Security to (inadequately) cover retirement costs, a point reinforced by Social Security’s own looming insolvency.

And fewer non-government workers are covered by pensions (about 15% of U.S. workers currently have access to any defined benefit plan, according to the Bureau of Labor Statistics). Setting aside money for retirement is practically a necessity.

Yet all is not happy and carefree in the world of tax-advantaged savings (that includes 403(b) and Individual Retirement Accounts, or IRAs). A lot of Americans have too little money saved — including an estimated 25% of older adults who have nothing set aside at all.

The median retirement savings for families is just $87,000, the Survey of Consumer Finances reports. Yet high-income earners seem to be doing quite well. The same survey found households in the top 10% have at least $559,000 set aside for retirement.

All of which suggests President Donald Trump’s recently signed executive order that will soon make it easier for participants in defined contribution plans to invest in alternative assets like private equity, cryptocurrency and private real estate is surely no panacea for what ails the 401(k) and could conceivably make matters worse if it lures investors into high-risk (and often high-fee) investments.

Imagine you are a moderate-income investor who unwisely shifts all their assets into a highly speculative private equity fund that tanks? It’s one thing for professional pension managers to evaluate the risks and rewards of private equity, it’s quite another to expect that from Average Joes who might be inclined to chase unrealistic returns.

Affluent retirees can always hire money managers to help them make informed decisions and it’s not uncommon for big 401(k) providers like Vanguard or Fidelity to offer some low-cost, perhaps even gratis, online advice.

But given that the government’s own statistics suggest non-affluent account holders are often making basic errors— not saving enough to take full advantage of an employer match, for example, or using a retirement account as a vehicle for non-retirement savings (as even an “emergency” withdrawal could cost you a hefty 10% penalty if it takes place before age 59 1/2) — adding more opportunities to make bad choices would seem unwise.

How can Trump make life better for low and moderate-income households saving for retirement?

Well, the most important might be to restore the solvency of Social Security by either tax increases, benefit reductions or a combination of both. After that, the administration might raise the limits on 401(k) catch-up contributions (how much workers over 60 could add to their retirement accounts), provide a federal match to lower-income workers’ contributions and further raise the age when beneficiaries must take required minimum distributions (RMDs) so these accounts may have a bit longer to grow.

Some movement was made in this direction by the SECURE 2.0 Act enacted three years ago, but clearly more could be done.

The Trump changes to the 401(k) may help a select number of participants and will certainly benefit Wall Street firms that deal in these alternative investments.

But they don’t really address the most pressing question: How can average American workers better afford to retire at a time when so few employers offer pensions and a Social Security shortfall still looms?

Private equity, crypto and real estate investment schemes won’t solve that core problem, and they could actually make it worse if not properly regulated.

— From Tribune News Service