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Sarinyapinngam\/Getty Images<\/p>\n
The early months of 2026 have proven rocky for the U.S. economy. The stock market has seen\u00a0drastic swings,\u00a0the GDP is growing at a slower rate than expected, and\u00a0a sizable U.S. bank failed in January<\/a>. While there’s still time to see a correction in 2026, experts are predicting a financial crash in the near future and have some\u00a0grim predictions for the U.S. dollar<\/a>. Should a crash\u00a0occur, many Americans’ retirement savings may be at risk of being seized by Wall Street.<\/p>\n Having your assets seized by a larger institution may sound dystopian, but the Uniform Commercial Code (UCC) \u2014 a set of laws that governs banking and transactions \u2014 makes it a possibility. It’s a fairly common practice for financial institutions to leverage their clients’ assets as collateral to secure loans from other business entities;\u00a0the\u00a02008 financial crash was largely caused by institutions exhibiting a similar behavior\u00a0with mortgages.<\/p>\n The UCC dictates that, if an institution offering the collateral fails, its creditors could then lay claim to that collateral to recoup their losses. This is because, in many cases, individuals who invest in stocks or bonds don’t actually own them. Investors are\u00a0afforded many of the same benefits of outright ownership, but the\u00a0bank or brokerage firm\u00a0still manages the asset.\u00a0So, if the majority of the wealth you’re building for retirement is invested into the market \u2014 a practice many experts recommend \u2014 there is a possibility that another party could be legally entitled to those assets in the event of a market crash.<\/p>\n
<\/p>\n Can you protect your retirement savings from a market crash?<\/p>\n
Despite the scary possibility of losing your savings, not all retirement investors are at risk. The U.S. Securities and Exchange Commission (SEC), which oversees investment markets, only permits financial institutions to use customer assets held in margin accounts as collateral. Margin trading is a form of investing in which individuals borrow money from their broker against their assets to purchase more securities and requires a specialized account. Typically, 401(k) and IRA accounts do not have these features. However, the practice grew\u00a0in popularity among everyday investors during the\u00a0COVID-19\u00a0pandemic.<\/p>\n
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