Trump鈥檚 new retirement plan builds on a bipartisan model
A federal match program for the retirement savings of low-income workers is gaining new momentum in the wake of President Donald Trump鈥檚 State of the Union address Tuesday.
The idea for the new 401(k)-type plan, based on a Biden-era plan, is to jump-start saving among the estimated 50 million private-sector American workers who lack access to employer-sponsored retirement plans. The program would not only provide a match but also a federally sponsored plan that makes it easy for workers to sign up. Details are still emerging.
鈥淗alf of all working Americans still do not have access to a retirement plan with matching contributions from an employer,鈥� the president said. 鈥淭o remedy this gross disparity, I鈥檓 announcing that next year my administration will give these often-forgotten American workers 鈥撀爂reat people, the people that built our country 鈥撀燼ccess to the same type of retirement plan offered to every federal worker. We will match your contribution with up to $1,000 each year as we ensure that all Americans can profit from a rising stock market.鈥�
Why We Wrote This
President Trump鈥檚 proposal could help close the retirement gap for millions of private-sector, part-time, and low-income workers without employer-sponsored plans. Building on a Biden-era effort, the president鈥檚 plan offers a federal match to boost retirement security.
suggest that the plan would build on the existing Saver鈥檚 Match (a 50% match up to $1,000) established under the SECURE 2.0 Act, signed by President Joe Biden in 2022. The program, which goes into effect in 2027, gives eligible low-income workers an annual 50% federal match on up to $2,000 in their retirement investments. But the new plan comes with a potential twist: It could streamline the sign-up process.
In his address, Mr. Trump referenced, though not by name, the government鈥檚 current Thrift Savings Plan. Many of its participants are automatically enrolled when they start their government employment. Like a 401(k) private retirement account, the plan gives federal employees and military service members access to a group of low-fee funds in stocks and government bonds.聽
Signing up for President Trump鈥檚 proposed plan could turn out to be almost as easy. The Trump administration would use its existing authority, avoiding Congress, to establish automatic accounts for low-income workers, according to the Wealth Equity Lab at The New School for Social Research. An Axios article published Wednesday quotes the lab鈥檚 director, Teresa Ghilarducci, saying workers would check a box on their tax form to enroll. Dr. Ghilarducci worked with Kevin Hassett, now White House economic adviser, on a 2021 white paper proposing an early version of the plan.聽
The plan parallels the child-oriented Trump Accounts, created last year by passage of the 鈥淥ne Big Beautiful Bill鈥� Act. The federally administered accounts will receive $1,000 in federal investment money for children born between 2025 and 2028.
