So the market will forever and always trend upward. If markets weren't inherently positive-sum, no one would participate in markets.

The theory in market participation is sound, it's the practice that's whack. Because it's a complicated financial system that employees are sheep-dipped into with no prep whatsoever, it's very easy to lose a shit-ton of money because you don't know about the little gotchas. This is by design: the people who run the industry make their money on the gotchas.

The idea that shit's gonna go down and oh holy fuck why put your trust in your retirement fund is facile. You've got two choices: hoard guns'n'gold under your mattress or trust in the system. Something that happened a surprising amount up here in WA foreclosure courts: Washington State gives the foreclosed the right to demand that the forecloser "produce the note." This means that for Bank of America to kick you out of your house, Bank of America has to find the paper mortgage with their name on it. Which should be easy, but when your mortgage has been sold eighteen times, tranched six, securitized eleven and dissolved in bankruptcy court, it's kinda tricky to lay hands on that fucker. So what would happen is a bank would take Joe Destitute to court, Joe Destitute would say "produce the note," the bank would fail, and the judge would say "Congratulations, Joe, you own the house free'n'clear." And if you're behind on your payments, what you got to lose? After all, the worst they can do is throw you out, which they're gonna do anyway.

And that's what collapse looks like: if you're in it, you own it until someone with a bigger claim comes along. As fundamental collapse has never hit a modern nation outside of war, there will be large, highly-motivated organizations attempting to keep shit working. That's you, your retirement fund and your mortgage, cooking along through thick and thin, forever and ever amen.

The primary flaw with a 401(k) is it may not be efficient. There may be better instruments for investment. From tax purposes they kind of rock hard.