President Trump announced in his State of the Union address on Tuesday night that he will provide government-sponsored retirement accounts for Americans who do not have employer-sponsored retirement plans. He pledged to inject up to $1,000 in matching funds annually into the accounts of these workers.
Starting next year, Trump plans to offer government-subsidized retirement accounts to Americans who do not have 401(k) plans or other employer-sponsored retirement accounts. This initiative aims to provide a retirement plan similar to the one offered to federal workers.
“We will match up to $1,000 annually for your contributions to ensure all Americans can benefit from the soaring stock market,” Trump stated during his address.
The move is intended to assist the “often forgotten American workers” who cannot access employer-sponsored 401(k) retirement accounts, Trump explained.
“Since I took office, the typical 401(k) account balance has increased by at least $30,000… because the stock market has been outstanding,” Trump pointed out. “However, half of American workers still do not have access to retirement plans with employer contributions.”
According to data from the American Association of Retired Persons (AARP), around 56 million private sector employees in the U.S. currently do not have access to employer-sponsored retirement plans, such as 401(k) plans.
The White House stated that it is expanding an existing law passed during former President Biden’s tenure called the “Secure Act 2.0,” which is an update to a law passed during Trump’s first term. One provision set to take effect next year states that if workers with existing retirement accounts contribute $2,000 annually, the government will match up to $1,000 into their retirement accounts, similar to a benefit program offered to federal employees.
The Insured Retirement Institute expressed encouragement by the President’s remarks but expressed a desire to learn more details. Both parties have long supported similar retirement savings proposals. Kevin Hassett, the Chair of the White House Council of Economic Advisers, has also supported similar ideas and advocated for legislation during the Biden administration to create such plans for private sector employees without employer-sponsored retirement plans.