Mention a Packard or Studebaker to classic car buffs and eyes glisten. These sleek wheels were once the epitome of luxury. In 1954, the two companies merged, but the new company lost its traction and US production came to a screeching halt in 1963. When the company went kaput, thousands of the company’s workers discovered that their traditional defined benefit pensions guaranteeing an income stream for life were terminated too. The outrage caught the attention of lawmakers, and although it took more than a decade, federal legislation to protect workers’ retirement savings was signed into law in 1974: the Employee Retirement Income Security Act, or ERISA. That law is the spine of much of today’s retirement benefit landscape for American workers, but it’s having a midlife crisis. The gist of it: ERISA was created to protect workers by overseeing retirement accounts like traditional pension plans and, eventually, 401(k) and most 403(b) plans, but it only safeguards some of us. In a special episode of Decoding Retirement, I sat down with Robert Powell, a retirement expert and host of the podcast; and Molly Moorhead, Yahoo Finance’s personal finance editor, to discuss how American workers are faring under ERISA. Read more: Retirement planning: A step-by-step guide ERISA fortified retirement savings to a more stable system, ensuring that plan participants receive their benefits and that the Studebaker-Packard pension collapse doesn’t happen again. The law imposes funding requirements for companies, rules for employee eligibility, and fiduciary standards requiring employer plan sponsors to act solely in the interest of participants. It does not, however, require any employer to establish a retirement plan. The law also shortened eligibility and vesting periods. “ERISA’s accelerated vesting rules have made retirement benefits more portable, accommodating today’s mobile workforce,” Powell said. “And reporting and disclosure requirements under ERISA have significantly reduced retirement plan fees, improving value for participants.” Importantly, the law established the Pension Benefit Guaranty Corporation, a federally sponsored insurance fund that safeguards workers when pension plans go up in smoke. “In essence, it’s an insurance company that says if your employer’s pension plan goes belly up, there is at least an insurance company there that will pay you some percent of what your scheduled benefits were,” Powell said. ERISA also protects 401(k) and many 403(b) plans since they’re employer-sponsored retirement accounts. Story Continues As the world of work has turned, ERISA has mostly kept its promises, but it’s increasingly clear that the law needs some sharpening to make retirement savings safer for workers today. There has been a price to pay for ERISA’s guardrails. Employers gradually stopped offering traditional pension plans, partly because of those rigorous rules. In 1970, more than half of full-time workers were covered by a traditional pension, according to the US Bureau of Labor Statistics. Today, just 11% of private employees participate in traditional, or defined-benefit, pensions, compared with around 35% in the early ’90s. Moreover, many small-business owners contend offering a retirement plan to employees is simply too costly and complicated to manage under the law. ERISA turned 50 in September. The job market, the state of the middle class, and the nature of work have all evolved in that half-century. Here are some factors that ERISA doesn’t account for: The rise of IRAs. Five decades since the law was created, it only applies to about half of private-sector US workers — those who are covered by an employer retirement plan. The rest either work for a small business that doesn’t have a plan or are contract workers. Only one-third of employees at small businesses have access to an employer-sponsored retirement plan, according to the Bipartisan Policy Center. The number of gig workers, contractors, and freelancers has also blown up. If you have earned income, you can save for retirement in a tax-advantaged saving option, like an Individual Retirement Account (IRA). But ERISA doesn’t apply to IRAs, because they didn’t exist when it was enacted. “Because there’s no fiduciary rule on these accounts, that potentially exposes participants, especially seniors, to financial exploitation during rollovers,” Powell said. ERISA was created to protect workers by overseeing retirement accounts like traditional pension plans and eventually 401(k) and most 403(b) plans, but it only safeguards some of us. (Getty Creative) · designer491 via Getty Images Longer lives. Lifespans have increased by around a decade since the 1960s, putting even more pressure on people to save. The number of Americans 65 and older is projected to increase from 58 million in 2022 to 82 million by 2050, and the 65-and-older age group’s share of the total population is projected to rise from 17% to 23%, according to the US Census Bureau. “Based on our research, over 40% of all US households might expect to run out of money in retirement,” Surya Kolluri, head of the TIAA Institute, told Yahoo Finance. Translation: More workers need access to retirement plans, and ideally, ones that offer the gutter bumpers provided by ERISA. Job hopping. This wasn’t really a thing back in the early 60s, but it sure is today. Last year, the median number of years that wage and salary workers had been with their current employer was 3.9 years, the lowest since 2002, according to the US Bureau of Labor Statistics. That can be a problem when it comes to saving for retirement. A typical worker sees a 10% increase in income when switching employers but a one percentage point decline in their retirement saving rate, according to Vanguard research. And when an employer does not offer automatic enrollment in its retirement plan, 1 in 4 new hires stop saving for retirement altogether. In other cases, saving rates fall because the new plan sets a default saving rate — typically 3% — that is lower than the rate at their prior employer. Consider this: Researchers found that for a worker earning $60,000 at the start of their career who switches jobs eight times across employers (for a total of nine jobs), the estimated loss in potential retirement savings could be about $300,000 — enough to fund an estimated six additional years of spending in retirement. Starting this year, 401(k) and 403(b) plans established after Dec. 29, 2022, must automatically enroll all eligible employees at a default deferral rate of between 3% and 10% of their salary, and the rate must increase every year by 1% until the participant hits at least 10% and no more than 15%. Workers can change the rate or opt out. The need for more protection for IRA investors is a no-brainer. IRAs hold around $15.2 trillion in assets compared to approximately $8.9 trillion in 401(k) plans, according to the Investment Company Institute. Savings rolled over from 401(k)s and other employer-sponsored retirement plans account for about half of IRA assets. Nearly two-dozen states have enacted new programs for private sector workers, and 17 are auto-IRA programs. They require most private employers that don’t sponsor a savings plan to enroll workers in a state-facilitated IRA at a preset savings rate — usually 3% to 5% — which is automatically deducted from paychecks. The plans typically ramp up their employees’ contributions by 1% each year. “The state programs provide a simple, easy option so people can start saving quickly,” said John Scott, director of Pew Charitable Trusts’ retirement savings project, “but they’re not covered by ERISA.” A new rule finalized by the Department of Labor requires more financial advisers, brokers, and insurance agents to act as fiduciaries when they advise people on investments that roll over from workplace plans to IRAs. That regulation was scheduled to take effect last September, but litigation has delayed the start date. Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist, and the author of 14 books, including “In Control at 50+: How to Succeed in the New World of Work” and “Never Too Old To Get Rich.” Follow her on Bluesky. Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more Read the latest financial and business news from Yahoo Finance”