Trump vs. Obama: Whose 401(k) Made You Richer?

The point is, the tools aren't the issue.

The real problem is whether people have the knowledge, guardrails, and fiduciary protection to use those tools well.

Give someone a hammer and they can build a house.

Or if they don't know what they're doing, they can just as easily demolish the neighbor's mailbox and get a very stern letter from the HOA.

The hammer's not the problem.

Hello friends, this is Tyler Gardner welcoming you to another episode of your Money Guide on on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing.

So let's get started and get you one step closer to where you need to be.

I want to start this week's episode by admitting something that feels a little like confessing I still sometimes Google how to hard boil an egg.

I am deeply afraid of talking about money when it even remotely brushes up against politics.

It feels like trying to explain the rules of cricket at Thanksgiving.

Half the room politely nods and pretends to care, the other half throws turkey legs at you and never hears a word you said.

But here's the reality that I know we all know.

Sometimes finance and politics are like peanut butter and fluff.

completely inseparable.

Other times they're more like peanut butter and motor oil.

They really don't belong together.

But here we are, always pretending that they do.

So lovingly, I've decided to subtitle this week's episode, Things You Should Care About Regardless of Who You Love or Hate in Washington.

Because while we can all agree on very little these days, I think we can agree that whether or not you get to retire before you're 87 is worth setting aside partisan rage for just over 25 minutes.

In this episode, I'm going to walk through how the Obama administration thought about shifting the 401k system,

and how the Trump administration thought about and is thinking about the same.

I'll serve up some facts that some of you might call not facts, highlight a few distinctions, and then, like Clint Eastwood in The Good, the Bad, and the Ugly, we'll squint meaningfully into the sun and talk about what actually matters.

But before we get into it, a quick disclaimer.

As many of you should know, no policy will ever be objectively good for everyone, and none will be objectively bad for everyone.

That's just not how truth works, and it's not how money works.

And before you email me telling me I'm a ding-dong who clearly supports Eurasia over East Asia, please remember, I am not here campaigning for anyone.

I don't even like campaigning for Girl Scout cookies.

This is about education, not electioneering.

And honestly, it's also a personal challenge for all of us, because it's become nearly impossible to have a curious conversation about anything these days without someone assuming you're plotting to steal their lawn sign.

So, my challenge to you, just for this episode, try on the radical idea that you can think someone is a complete ding-dong and still concede they may have stumbled onto one semi-reasonable thought.

You see how many qualifiers I just used there?

Stranger things have happened, but I'll leave that part and that judgment to you.

Now, before we dive in, I do have one small request this week.

I have put together a short survey in the show notes.

It's painless, I promise, should take you about 97 seconds.

And most importantly, it will help me figure out who's actually listening, what you're enjoying, and what you want more of.

Think of it as leaving a tip for your waiter.

If you found this meal useful, fill it out.

If not, you can always complain on Yelp later.

And if you did enjoy it, leaving a review on Apple Podcasts is the audio equivalent of sending me a fruit basket.

Absolutely would love it.

In exchange, at the end of today's episode, I've got a great book recommendation for all of you.

One that changed my financial life entirely and really taught me to think more appropriately about how to invest my money.

Okay, on to the meat of this week's episode.

We're going to be tackling something that sounds dry, but is secretly very juicy for your wallet and for your heated political debates over the holidays, 401k policy.

Specifically, what Obama proposed versus what Trump recently put forward.

And last disclaimer, when I say recently, I'm fully aware that by the time you're hearing this, the news cycle has already chewed this up and spit out three new scandals.

That's fine, because I always aim for content that's as useful today as it will be in 20 years.

None of this is timely, unlike my high school bio class, which expired roughly three weeks after I graduated.

So, let's keep it focused.

We're not debating personalities, rallies, or haircuts.

We're just going to talk about the money side of things, how these policies might affect your retirement, and to keep it digestible, I've boiled it down into five big ideas that you should care about, regardless of your politics.

Access,

simplicity, fiduciary rules, risk, and education.

Let's start with the most most basic one.

Whether people can even get in the door.

Thing you should care about number one.

Before we offer or care about options, we need access.

Here's a sobering fact to chew on while you stir your morning coffee.

According to the Bureau of Labor Statistics, about 68% of private sector workers have access to a retirement plan through their job.

That sounds decent, until we follow that up and realize that only 52%

actually participate, which is a bit like being given a free gym membership and then deciding,

I'll just keep using my ottoman as a Peloton.

The meditation part of Peloton, that is.

And if you work for a small business, the odds get even worse.

Only about half of workers at firms with fewer than 100 employees have access to an employer-sponsored plan at all.

That's roughly 57 million Americans wandering around without a workplace retirement plan as of 2023.

Picture Fenway Park filled to capacity times, well, a lot.

Math is hard, and I already told you my high school classes didn't exactly stick with me, but I trust you get the idea.

That gaping hole is what policymakers have been trying to close.

Obama's answer was the the auto-IRA, basically requiring employers with more than 10 workers and no retirement plan to automatically enroll their people in one.

He also suggested scrapping the bizarre common bond rule that said small businesses could only share retirement plans with other small businesses if they were in the same industry.

His idea?

Let your neighborhood bookstore and your local dentist pool resources and costs.

After all, why should Teeth and Tolstoy not share a 401k?

Trump's Department of Labor did loosen these same MEP rules in 2018, but only slightly.

More like cracking the door when Obama wanted to blow the hinges off entirely.

Now,

why does this matter?

Because access predicts outcomes.

Let me repeat that.

Access predicts outcomes.

Vanguard's How How America Saves 2023 report shows that the average 401 balance after 10 plus years is north of $250,000.

Meanwhile, the median IRA balance nationwide is only about $39,000.

Note, the 401k is employer-sponsored, and the IRA is self-opened, self-funded, self-invested, and apparently self-ignored.

That difference isn't luck or wizardry.

It's structure.

401ks have nudges like automated payroll deductions, employer matches, much higher contribution limits, and default investments explained to you by your wonderful local HR team once a year at Open Enrollment.

They're basically the financial equivalent of bowling bumpers.

You may not bowl a strike, but at least you're not hurtling the ball into the nacho stand every frame.

And the magic of automatic enrollment, it's almost unfair.

Vanguard found that participation jumps from 47%

to 93%

when workers are auto-enrolled.

It's like switching from opt-in to opt-out on dessert.

Suddenly, everyone's eating a heck of a lot more cake.

So whatever your political leanings, I think we could agree, more access is almost always good when it comes to our retirement accounts.

Obama's emphasis on widening the entryway to retirement savings probably tackled that bigger crisis.

The fact that millions of Americans aren't saving at all.

Trump's tweaks gave more choice to people already inside the system, which is fine, but it's worth remembering you can't pick funds if you don't even have an account to begin with.

Thing you should care about number two: simplicity versus shiny objects Here's one of the biggest contrasts between Obama and Trump's vision for the 401k

What they thought people actually needed within their retirement account Obama's answer was essentially simplicity in 2014 he rolled out the MyRA the financial equivalent of retirement accounts for dummies on training wheels with hand holding perhaps being homeschooled the

had no fees, no minimums, and it was completely portable.

You could change jobs without leaving your account behind.

In theory, it was idiot-proof.

In practice, it was, well, rather boring and amazingly ineffective for building long-term wealth.

The only investment option was: wait for it,

keep waiting,

just one more minute.

Government bonds.

Translation, you could earn a safe, steady 2% to 3%,

while the S ⁇ P 500 was skipping around with double-digit real returns like a kid on pixie sticks.

To be fair, my RA was designed for people who otherwise wouldn't save at all.

Again, he was trying to solve an excess and participation problem.

So in that light, yeah, 2% is better than 0%.

But it was never going to build real wealth that could sustain someone throughout retirement.

Which is why, by the time it was quietly shuttered in 2017, only about 20,000 accounts had been opened nationwide, with an average balance of, wait for it,

wait for it, sorry, I know, I'm being obnoxious, $1,500.

That's basically a rounding error compared to the 100 million Americans already in workplace retirement plans.

So my RA didn't exactly catch fire.

Now, Trump's approach, almost the opposite.

In August 2025, he signed an executive order directing the Department of Labor to open the doors to alternative assets inside 401ks.

Suddenly, instead of choosing between an index fund and a target date fund, you could, theoretically, toss some of your retirement money into private equity, real estate, or even crypto.

On paper, it sounds thrilling.

Who wouldn't want their nest egg to feel a little more like an episode of Shark Tank?

But here's the big hoop law that you've been hearing all about recently.

Alternatives are complicated, expensive, and often as liquid as a fruitcake from last Christmas.

Private equity funds can absolutely charge 2% annually plus 20% of profits.

Liquidity?

Forget it.

You don't just cash out your private equity stake on a random Tuesday.

And risk?

Let's just say a 2022 GAO report politely warned that many 401k participants lack the financial literacy to evaluate these products responsibly.

In plain English, dropping crypto into a retirement plan is like giving a chainsaw to someone who's only ever used safety scissors.

Sure, it cuts, but you might lose a limb, or a large chunk of your retirement fund.

So here's the bigger point.

Obama tried to fix retirement by making it foolproof.

Trump tried to fix it by making it adventurous.

One treats adults like toddlers who can't handle risk, the other treats them like hedge fund managers who are totally cool reading a 200-page private equity prospectus on their lunch break.

Both, of course, miss the middle, which I assure you, we will cover.

Because what workers really need isn't more extreme simplicity or more shiny objects.

It's better guidance somewhere between the sippy cup and the chainsaw.

And yes, that's exactly the space I'm trying to live in with this show and with my work.

Practical enough to keep you safe, adventurous enough to keep you awake.

Thing number three you should care about.

The fiduciary question.

If you remember only one thing from Obama's retirement policies, let it be this.

He wanted financial advisors to play nice.

In 2016, his Department of Labor rolled out what became known as the fiduciary rule.

In plain English, if you give advice on retirement accounts, you have to act in your client's best interest.

Sounds obvious, right?

I mean, that's the literal job description.

Imagine if your doctor prescribed cholesterol pills because they got a free toaster from Pfizer.

Oh, wait, that's probably how part of the medical industry works.

Okay, well, imagine if your mechanic replaced your perfectly fine brakes just to make it...

Well, that's actually how that works too.

Well, regardless, you'd be furious.

But before this rule, many financial advisors only had to meet a much lower bar called the suitability standard.

That meant they could recommend something that was suitable for you, even if it wasn't the cheapest or best option.

And here's the easiest way you'll ever remember the difference between a fiduciary responsibility versus the suitability standard.

Imagine you're thirsty.

Under the old rules, your advisor could hand you a $6 bottle of Fiji water instead of the 50 cent tap water.

Why?

Because you're thirsty.

And the $6 bottle of Fiji would hydrate you.

It's therefore suitable.

But it also padded their commission rather nicely.

Under the fiduciary rule, they'd have to hand you the tap water first.

Revolutionary, I know.

And here's why this mattered.

According to the White House Council of Economic Advisors, conflicted financial advice was costing Americans about $17 billion a year in excess fees and underperformance.

$17 billion.

That's not pocket change.

That's an entire season of succession worth of private jets, overpriced watches, and hush money settlements.

Trump's administration, though, saw the fiduciary rule as government overreach.

It was challenged in court and struck down in 2018.

The industry argued it would limit choices, increase compliance costs, and push smaller investors out of advice entirely.

In other words, if we can't make money off you, we're not going to serve you.

Which, if nothing else, is refreshingly honest.

Obscene and disgusting, mind you, but at least honest.

So now we're back to a world where some advisors are fiduciaries, some aren't, and it's up to you to know the difference.

That's no small thing.

A 2022 CFP board study found that only 39% of Americans even know what the word fiduciary means, which is a bit like boarding a plane where only 39% of passengers know what pilot means.

Not comforting.

So here's how this ties in to our 401k discussion.

Obama tried to raise the ethical floor.

Trump knocked it back down, worried it would price people out of advice altogether.

Well, at least that's what he said at one point.

But more importantly, both arguments miss the elephant in the room, that most Americans don't even know what kind of advice they're getting in the first place.

What we need isn't another tug-of-war over rules, but clear, unmissable labels that tell you when someone's on your side and when someone's really just trying to buy themselves a bigger boat.

Thing number four, you should care about.

Alternatives can be your best friend if...

Because I trust, you trust that I'm not selling you anything here but an earnest attempt to help you think through this for your own decision-making.

Here's what you need to know about alternatives as an asset class.

Alternatives are like the shiny objects of investing.

Private equity, real estate, venture funds, collectibles, even crypto.

For decades, these were reserved for institutions and the ultra-wealthy.

Even today, many of them are still behind velvet ropes, only available to accredited investors.

Translation, you either make $200,000 a year or you're already sitting on at least a million dollars in net worth excluding your primary residence.

One appeal is obvious.

Status.

The truth is, half the reason people invest in private equity is so they can tell their friends they invest in private equity.

It's the financial equivalent of driving a Tesla or sending your kids to private school.

Maybe it's a better ride.

Maybe it's a better education.

But Honestly, it mostly just feels good to say it out loud.

Oh, you're in an index fund?

Cute.

I'm in private equity and my kid goes to Phillips Academy.

That said, the serious appeal of these investments is real.

They can diversify a portfolio, hedge against inflation, and, in the right hands, juice long-term returns beyond what a simple stock and bond mix might deliver.

That's why endowments like Yale and Harvard's have been piling into alternatives for years.

And trust me, they'll be the first to remind you how smart they are for doing it.

Many of them went to private school, after all.

Here's the simplest way I can explain it.

If we were all textbook investors, we'd all want portfolios made up of assets that don't always move in the same direction.

You don't buy bonds because they'll crush stocks.

You buy them because when stocks get hammered, bonds might behave like the sober friend at the party, still upright while everything else is on fire.

Alternatives offer even more of those zig when other things zag possibilities.

But here's the catch.

Alternatives aren't your everyday index funds.

Alternatives come with sky-high fees, as we've already explored, long potential lock-ups, meaning your money may be in prison for years, and risk profiles that look like a choose-your-own-adventure book written by Kafka.

A 2022 GAO report warned that most retirement savers don't have the financial literacy to evaluate these.

In other words, giving the average saver a private equity fund is like handing car keys to someone who hasn't even figured out how the turn signal works.

That doesn't make alternatives inherently bad.

With the right asset allocation, a long time horizon, and proper oversight, they can smooth out volatility and broaden exposure to markets most of us don't usually touch.

Used well, they might even increase returns.

The real question isn't whether alternatives have value.

They do.

It's whether the average 401k saver is equipped to use them wisely.

Without education and guardrails, alternatives risk becoming less of a portfolio tool and more of a very expensive distraction, or worse, a status symbol that costs you your retirement.

Thing number five that you should care about.

The solution is education.

When you zoom out, the difference between Obama and Trump's proposals starts to feel like two sides of the same coin.

Obama's retirement policy boiled down to keep things simple and safe because otherwise people won't save at all.

I get it.

That's a noble stance and it's grounded in some genuine data about participation rates.

Trump's boiled down to make things broader and bolder because the world isn't just stocks and bonds anymore, and it's time people had access to what they would want to invest in without government overstep.

Both are fair points.

Both also come with gaping holes you could drive a Wells Fargo sales scandal through.

So that's where I, a random guy currently walking through the woods in Vermont, talking to himself about 401ks, will make the following case.

The problem isn't Obama.

The problem isn't Trump.

The problem is a lack of education surrounding either proposal and why they would matter.

Think about it.

Simplicity, without understanding, just keeps people on training wheels forever, pedaling furiously but never moving past the parking lot.

Nobody's going to get rich and retire comfortably on government bonds.

Unlimited options without understanding, however, is the opposite.

That's throwing someone onto a Ducati motorcycle without a helmet on the Audubon.

In both cases, the missing ingredient is basic financial literacy.

Because let's be honest, nobody who actually understands investing would willingly park a 40-year nest egg entirely in government bonds and call it done.

And nobody who understands investing thinks it's a good idea to sprinkle crypto into a public school teacher's 401k in Idaho and pretend it's basically the same thing as a target date fund.

It's not.

One zigs, the other zags, and one occasionally evaporates overnight and sends you a note telling you it was your fault for missing the quarterly liquidation window.

If more Americans understood the basics of risk, fees, liquidity, and asset allocation, Obama's starter accounts wouldn't have been necessary, and Trump's crypto and private equity buffet wouldn't be nearly as terrifying.

With education, both policies suddenly look less like landmines and more like tools, something you can use appropriately if you know what you're doing.

What retirement policy really needs isn't another round of political gimmicks.

It needs a foundation, because whether you hand someone a MyRA or a crypto fund, the outcome depends entirely on whether they know what to do with it and what its benefits and limitations are.

Until then, we're stuck arguing about whether people deserve deserve training wheels or monster trucks when the real answer is teaching them how to drive in the first place.

So let's try to tie this all together.

More options are not objectively good or bad, so I hope you ignore that nonsensical line of thinking.

A low-cost target date fund might be all one person ever needs.

Set it, forget it, and let compounding quietly do its thing.

But for someone else, diversifying into private equity, real estate, or other alternatives could make tons of sense.

Honestly, I would have loved to have had access to alternatives in my 401k when I was 22.

The point is, the tools aren't the issue.

The real problem is whether people have the knowledge, guardrails, and fiduciary protection to use those tools well.

Give someone a hammer and they can build a house.

Or, if they don't know what they're doing, they can just as easily demolish the neighbor's mailbox and get a very stern letter from the HOA.

The hammer's not the problem.

That's where the real work lies, not in choosing sides, but in making sure that when policymakers open a door, the people walking through it actually know where it leads.

Because a new investment option is only as helpful as your ability to understand what it does, what it costs, and what the risks really are.

So I'll end exactly where I started.

If we're going to educate ourselves on these proposals, whether under Obama, Trump, or whoever comes next, we need to set aside our feelings toward the personalities and focus on what matters, real information that helps real people make better choices with real money.

I hope this episode has done at least a little bit of that by walking through the actual policy proposals, showing you their pros, their cons, and why ultimately education is the single best investment we could all make.

And as a final parting gift, I told you I had a book recommendation for you.

If you want to learn more about asset allocation and why it truly matters for you to educate yourself on non-correlated asset classes, I would encourage you to pick up a copy at some point of Richard Ferry's All About Asset Allocation.

It was absolutely the first book that ever got me truly fired up to learn more about how to slice up the pie that is our net worth.

Thanks for listening and I'll see you all next week.

Thanks for tuning in to your money guide on the side.

If you enjoyed today's episode, be sure to visit my website at tylergardner.com for even more helpful resources and insights.

And if you are interested in receiving some quick and actionable guidance each week, don't forget to sign up for my weekly newsletter where each Sunday I share three actionable financial ideas to help you take control of your money and investments.

You can find the signup link on my website, tylergardner.com, or on any of my socials at socialcapofficial.

Until next time, I'm Tyler Gardner, your money guide on the side, and I truly hope this episode got you one step closer to where you need to be.